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  • Writer's pictureThe San Juan Daily Star

S&P 500 hits record high with earnings, rate outlook in spotlight

Wall Street gained on Wednesday, with the benchmark S&P 500 scaling a new record high, as investors took stock of major corporate earnings and assessed remarks from policymakers for more clues on the outlook for interest rate cuts.

Ford rose 3.5% as the automaker increased first-quarter dividend and decided to scale back investments in new capacity for loss-making electric vehicles.

Meanwhile, Snap slumped 35.1% to a two-month low on missing quarterly revenue estimates, as the Snapchat owner struggled to compete for advertising dollars.

With more than half of the S&P 500 companies having reported quarterly results, 81.2% surpassed profit expectations, according to LSEG data on Tuesday.

“The two biggest things that could cause a selloff are if inflation surprises on the upside, or the Fed says that we have changed from an easing bias to a tightening bias,” Larry Tentarelli, chief technical strategist for Blue Chip Daily Trend Report, said.

Private equity firm KKR & Co Inc said on Tuesday its fourth-quarter distributable earnings rose 4%, buoyed by strong growth in income from asset sales in addition to management and transaction fees.

After-tax distributable earnings, which represents the cash used to pay shareholder dividends, rose to $888.5 million from $851.9 million a year earlier. That resulted in distributable earnings per share of $1, which was higher than the mean Wall Street analyst estimate of 91 cents, according to LSEG data.

KKR said its net profit from asset sales surged 85% to $359.6 million during the quarter, with divestments across its private equity and infrastructure portfolios.

Fee-related earnings jumped 21% to $675.4 million, driven by higher management fee income and stronger revenue from transaction fees that KKR generates mainly by arranging financing for its own deals.

KKR’s private equity funds gained 3% in the fourth quarter, infrastructure funds were up 5%, while leveraged credit funds rose 3%. The value of its opportunistic real estate portfolio, however, fell 1%.

With Fed Chair Jerome Powell ruling out a March interest rate reduction, traders are awaiting fresh clues from central bankers on the timing of the policy easing.

Minneapolis Fed President Neel Kashkari noted he expects two to three rate cuts this year for now, while Fed Governor Adriana Kugler said more assurance is needed before lowering rates.

At 11:34 a.m. ET, the Dow Jones Industrial Average was up 160.16 points, or 0.42%, at 38,681.52, the S&P 500 was up 31.87 points, or 0.64%, at 4,986.10, and the Nasdaq Composite was up 106.21 points, or 0.68%, at 15,715.21.

Eight of the 11 S&P 500 sectors advanced, led by a 0.9% gain in the tech sector.

Among other stocks, New York Community Bancorp’s shares sank 13% even as the bank, led by its newly appointed executive chairman Alessandro DiNello, vowed to cut its exposure in the troubled commercial real estate segment.

Uber forecast quarterly core profit and gross bookings above estimates. However, its shares were last down 1.8% on deferring announcements related to capital allocation plans to its investor day on Feb. 14.

Fortinet jumped 2.4% on the cybersecurity firm’s fourth-quarter profit beat, while U.S.-listed shares of Alibaba Group lost 6.1% following downbeat quarterly revenue.

VF Corp shed 12.7% after missing expectations for third-quarter results, with the Vans sneaker maker also announcing CFO Matt Puckett’s exit this year.

Enphase Energy surged 17% as the solar inverter maker expects inventory levels to normalize and demand for its products to pick up by the end of second quarter.

Advancing issues outnumbered decliners for a 1.05-to-1 ratio on the NYSE and a 1.51-to-1 ratio on the Nasdaq.

The S&P index recorded 67 new 52-week highs and two new lows, while the Nasdaq recorded 79 new highs and 86 new lows.

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