The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) had their best February in almost a decade as investors absorbed a significant inflation figure.
On Thursday, the Nasdaq Composite finished up 0.9% at 16,091.92, its highest closing price on record. This is the Nasdaq’s first record closing since November 2021. The S&P 500 rose 0.5% on the day, closing at 5,095.88, a new record high. The Dow Jones Industrial Average (DJI) rose 0.1% for the day.
An inflation indicator highly watched by the Fed continued to fall last month, reflecting Wall Street’s predictions. The Personal Consumption Expenditures (PCE) index increased 2.4% year on year in January, down from 2.6% previous month. The “core” PCE, the metric most typically used by Fed Chair Jerome Powell, fell to 2.8% from 2.9% the previous month.
The anticipated publication of the PCE index data, the Fed’s favoured measure of inflation, has dragged on markets all week. Policymakers have often stated that they want to see more evidence of lessening pricing pressures before committing to rate decreases.
On Thursday, the Nasdaq Composite finished up 0.9% at 16,091.92, its highest closing price on record. This is the Nasdaq’s first record closing since November 2021. The S&P 500 rose 0.5% to finish the day at 5,095.88, a new record high. The Dow Jones Industrial Average (DJI) gained 0.1% for the day.
Both the Nasdaq and the S&P 500 saw their best February since 2015. The Nasdaq rose more than 6% this month, while the S&P 500 climbed more than 5%.
With 97% of the S&P 500 companies having reported profits for the fourth quarter, the S&P 500 is expected to expand by 4% in the fourth quarter compared to the same period last year, according to fresh FactSet data. The benchmark index’s profits are up for the second quarter in a row.
And, importantly, the expectation for profits growth in the current quarter is not declining at the usual rate.
According to FactSet’s senior earnings analyst John Butters, analysts typically cut profit expectations over the first two months of a quarter. Over the last 20 years, wages have been lowered down by an average of 2.9%. For the current quarter, profit projections have been lowered down by only 2.2%.
The software company, a major benefactor of the GenAI boom, announced higher-than-expected revenue in its fiscal third quarter and gave solid full-year expectations late Wednesday. Total revenue for the quarter increased 18% from the previous year to $78.4 million, thanks in part to a 23% increase in subscription revenue.
According to C3.ai CEO and tech pioneer Tom Siebel, the business is utilising its “first mover advantage” to capitalise on the “largest opportunity in the history of enterprise application software.”
“It’s difficult to overestimate the power and impact of AI,” Siebel said on Yahoo Finance Live today. “We are in the first part of the first inning, and the first hitter is on his way to the plate. This is not fleeting; it is substantial, and it will be massive.”
Siebel noted that C3.ai’s government business remains a highlight. In the quarter, the firm added 20 new government agreements, and overall bookings increased by 187% compared to the previous year.
Shares of Bud Light’s parent company, Anheuser-Busch InBev (BUD), are down more than 4% today after the beer giant reported a fourth-quarter profit and record revenue for the year, but has yet to see volume rebound.
Last quarter, volume fell 2.6%, vs Wall Street’s expectation of a 1.48% drop. Bud Light and other beer brands contributed to the reduced overall volume.
In the United States, fourth-quarter revenue was 17.3% lower than the previous year, with sales to retailers down 12.1% owing to Bud Light’s poor performance.
March 4 commemorates 11 months after a marketing campaign featuring transgender celebrity Dylan Mulvaney prompted a global boycott of the firm. Bud Light eventually lost its position as America’s favourite beer.
CEO Michel Doukeris described the US firm as having a “challenging year” on a conference call with analysts. “Our market share continued to improve gradually from May through the most recent weeks in February,” he told reporters.
The Street agrees with the demand for challenges.
“Soft volumes in the US demonstrate the brand’s ongoing harm, despite recent marketing attempts (UFC, PBR, etc.). Guidance is conservative / achievable to many,” said Bernstein analyst Ivan Holman in a client note.
The Fed’s preferred inflation index saw its lowest annual gain since March 2021 in January, meeting Wall Street expectations, although monthly prices grew at the highest rate in a year.
The 0.4% monthly increase in January’s Personal Consumption Expenditures index lifted the six-month annualised inflation rate beyond the Fed’s 2% objective for the first time since October.
However, this did not appear to alarm markets, which have quickly repriced for only three Federal Reserve interest rate decreases since a hotter-than-expected Consumer Price Index (CPI) report was issued in mid-February.