Dow on track for record close, S&P 500 nears 5,000-point milestone after fresh batch of earnings

What’s driving markets

U.S. stocks were rising on Wednesday, as traders gradually come to terms with the likely prospect of having to wait until May for an interest-rate cut by the Federal Reserve. Wall Street was refocusing attention on corporate prospects as the earnings season trundles on, with investors waiting to see if profits can support a market that’s sitting near record highs.

On Wednesday, Uber Technologies Inc.
UBER,
+0.18%
cleared Wall Street’s bar for the company’s earnings by reporting fourth-quarter revenue that rose to $9.9 billion, from $8.6 billion. CVS Health Corp.
CVS,
+2.67%
beat fourth-quarter profit expectations by a wide margin, but lowered its full-year outlook. PayPal Holdings Inc.
PYPL,
-0.12%,
Walt Disney Co.
DIS,
-0.31%
and Arm Holdings Plc
ARM,
+3.89%
are set to report after the close.

Corporate-earnings growth is holding up despite a period of sharply rising interest rates, and has been the primary reason behind the latest equity rally, according to Keith Buchanan, senior portfolio manager at GLOBALT Investments in Atlanta, which oversees $2.5 billion.

“Investors are taking heart in well-received earnings reports and are settling into Powell’s message, which has moved away from ‘higher-for-longer’ rates to ‘higher-for-not-that-much-longer’ rates,” Buchanan said via phone on Wednesday.

Investors continued to scrutinize the exposure of regional banks to the commercial real-estate sector. Moody’s Investors Service downgraded the credit rating of New York Community Bancorp Inc.’s
NYCB,
+6.79%
by two notches late Tuesday, lowering it into speculative-grade or “junk” status.

See: New York Community Bancorp’s stock closes at lowest level in 27 years as Yellen says she’s ‘concerned’ about commercial real estate risks

The bank’s shares attempted to bounce back on Wednesday and were up 3% after the lender named an executive chair and said total deposits have increased in the last several weeks. The SPDR S&P Regional Banking ETF
KRE
was down for much of the morning before moving 0.1% higher during the afternoon.

Dec Mullarkey, managing director at SLC Management, said the markets are “less alarmed” by the NYCB jitters, as the rest of the regional banks have already reported “sensible numbers” and their earnings reports don’t reflect accelerating weakness in the commercial real-estate sector.

As interest rates likely start to come down later this year — giving some breathing room to the regional banks — the fact that they’re not all under pressure at the same time makes it a manageable issue, Mullarkey told MarketWatch via phone.

Treasury’s record $42 billion sale of 10-year notes was met with solid demand Wednesday afternoon, leaving the 10-year Treasury yield
BX:TMUBMUSD10Y
around 4.1%.

In U.S. economic updates, the trade deficit widened slightly in December, to $62.2 billion.

Meanwhile, Federal Reserve officials made another round of appearances. Fed Governor Adriana Kugler said it would be “appropriate” to lower U.S. interest rates if inflation continues to slow, and that it is “critical” that inflation returns to the central bank’s target of 2%. Richmond Fed President Tom Barkin told MarketWatch that it’s a good idea for the Fed to take its time with rate cuts.

Companies in focus

• Class A shares of Snap Inc.
  SNAP,
  -35.39%
  plunged 36% on Wednesday, a day after the social-media company reported a revenue miss and offered a disappointing outlook.

• Ford Motor Co.
  F,
  +5.59%
  rose 5.3% after the carmaker reported quarterly revenue above Wall Street’s expectations and announced a next-generation, smaller EV to rival Tesla Inc.’s upcoming “Model 2.”

• Shares of Chipotle Mexican Grill Inc.
  CMG,
  +8.26%
  were up 9.4% after the Mexican fast-casual chain delivered well-received fourth-quarter results.

• Class A shares of Roblox Corp.
  RBLX,
  +12.02%
  soared 10.3% after the videogame platform easily beat quarterly bookings estimates.

• Enphase Energy Inc. shares
  ENPH,
  +17.55%
  jumped 18.4% on Wednesday after the alternative-energy company presented investors with a mixed quarter that nonetheless soothed more-immediate concerns about the ailing sector.

Jamie Chisholm contributed.