After three days of red closings, US equities rallied Wednesday, with the S&P 500 setting a new high and the Dow gaining more than 475 points.
The S&P 500 (^GSPC) closed at a record high of 5,248.50, up 0.8%. The Dow Jones Industrial Average (^DJI) increased by 1.2%, while the Nasdaq Composite (^IXIC) gained 0.5%.
The market bounce followed a three-day losing run for the benchmark S&P 500, which had hit a new closing high more than 20 times this year. And the benefits stretch beyond the beginning of 2024. According to Yahoo Finance’s Jared Blikre, the index is on course for its fifth consecutive monthly rise, which might indicate that it is prepared to continue its upward trend.
Later this week, investors will get the most recent reading of the Personal Consumption Expenditures (PCE) price index. The index, which includes the Federal Reserve’s preferred “core” PCE inflation metric, is scheduled for release on Friday.
The resurgence of meme stock, as well as the craze for firms that have become social media sensations, are also being discussed. Investors need go no farther than Reddit (RDDT), a platform that has been responsible for most of the fever over the years. Reddit stock had quadrupled since its IPO, but it plunged 11% on Tuesday as short interest increased owing to its recent spike.
Paramount Global (PARA) shares recovered losses after dropping following another credit downgrading.
S&P Global lowered the company’s debt rating to junk, noting the fast decrease of linear television as more people cut the cord in favour of streaming.
The ratings agency, which downgraded Paramount to “BB+” from “BBB-,” stated that the transition to streaming will continue to put strain on the company’s cash flow.
Paramount shares, which have fallen more than 20% since the beginning of the year, nudged up around 1% in afternoon trade on Wednesday.
The downgrading occurred while the firm considered possible purchasers. The Wall Street Journal reports that Apollo Global recently made an offer of $11 billion for the company’s studio. (Disclosure: Apollo Global Management owns Yahoo Finance.)
Paramount has long been considered a possible purchase target. Skydance Media, a production firm, has allegedly explored a two-step arrangement with Paramount’s owning company, National Amusements.
Shari Redstone, the non-executive chairperson of Paramount Global and president of National Amusements, will eventually decide the company’s fate. National Amusements holds around 10% of Paramount’s equity capital value and 77% of its voting shares, which are worth about $1 billion.
March is almost done, and the stock market surge has clearly rotated.
As of Tuesday’s closing, Energy (XLE) was the greatest outperformer, up more than 9%. Materials (XLB), Utilities (XLU), Communications Services (XLC), Financials (XLF), and Industrials (XLI) outperformed the S&P 500 (^GSPC) throughout the month.
Notably, the year-to-date performance of Financials, Energy, and Industrials outperformed the benchmark index, indicating a broadening of a market rally that had initially been driven primarily by gains in Tech and Communications Services (which includes several large tech companies).
What we’ve seen so far this year is additional evidence of a widening beneath the surface,” Citi US stock analyst Scott Chronert told Yahoo Finance.
Chronert went on to say that sectors that have succeeded are often associated with economic growth, whereas sectors that have trailed the S&P 500 this year, such as Consumer Staples (XLP), are typically considered defensive bets used by investors to prepare for an economic downturn.
“What we’re arguing is that that move [in stocks to start the year] is reflecting, one, conviction in the AI growth opportunity, but two, is also reflecting increased confidence in a soft landing,” he added.