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Wall Street closed sharply higher on Wednesday as market participants considering a notable decline in inflation rate. The consumer price Index (CPI) for December – a key inflation gauge – will be released on Thursday. For that, investors have ignored recent hawkish comment of several Fed officials. All the three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.8% or 268.91 points to close at 33,973.01. Notably, 22 components of the 30-stock index ended in positive territory while the remaining 8 in red. The tech-heavy Nasdaq Composite finished at 10,931.67, surging 1.8% or 189.04 points due to strong performance of large-cap technology stocks. The tech-laden index posted a four-day winning streak, for the first time since September 2022.
The S&P 500 advanced 1.3% to end at 3,969.61. All 11 broad sectors of the benchmark index closed in positive territory. The Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE), the Technology Select Sector SPDR (XLK), the Materials Select Sector SPDR (XLB) and the Industrials Select Sector SPDR (XLI) appreciated 2.7%, 3.6%, 1.7%, 1.6% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 2.5% to 21.09. A total of 11.42 billion shares were traded on Wednesday, lower than the last 20-session average of 11 billion. Advancers outnumbered decliners on the NYSE by a 3.78-to-1 ratio. On Nasdaq, a 2.25-to-1 ratio favored advancing issues.
Peak Inflation Seems Behind Us
U.S. stock markets have been fluctuating since the beginning of 2023 after an extremely volatile 2022. The two major concerns of last year, namely, a 40-year high inflation rate and the Fed’s ultra-hawkish policies in the form of decades high interest rates and tighter monetary control, are persisting in 2023. Nevertheless, peak inflation seems behind us. Less-than-expected inflation rates in October and November with respect to several measures and an unexpected drop in wage rate in December and November have clearly indicated this.
The Institute of Supply Management reported that the services sector index for December plummeted to 49.6% from 56.5% in November. The consensus estimate was 55.1%. Any reading below 50% indicates a contraction in services activities. The index contracted for the first time since May 2020, at the onset of the coronavirus pandemic.
A devastated housing market owing to the high mortgage rate, disappointing retail sales in December, the peak festive season, huge inventory accumulation by several retailers and a sharp fall in U.S. manufacturing activities indicated that the U.S. economy is cooling in the desired direction of the Fed. Several U.S. corporate giants have started retrenching manpower significantly at higher levels.
Q4 2022 Earnings Season in Focus
The fourth-quarter 2022 earnings season will kick start across all industries from Jan 13 as several banking and financial behemoths are slated to release their quarterly financial numbers. As of Jan 11, aggregate earnings of the S&P 500 Index are expected to be down by 7.6% year over year on 4% higher revenues.
Economic Data
For the week ended Jan 6, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 19 million barrels from the previous week. At 439.6 million barrels, U.S. crude oil inventories are about 1% above the five year average for this time of year.
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Stock Market News for Jan 12, 2023
Wall Street closed sharply higher on Wednesday as market participants considering a notable decline in inflation rate. The consumer price Index (CPI) for December – a key inflation gauge – will be released on Thursday. For that, investors have ignored recent hawkish comment of several Fed officials. All the three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.8% or 268.91 points to close at 33,973.01. Notably, 22 components of the 30-stock index ended in positive territory while the remaining 8 in red. The tech-heavy Nasdaq Composite finished at 10,931.67, surging 1.8% or 189.04 points due to strong performance of large-cap technology stocks. The tech-laden index posted a four-day winning streak, for the first time since September 2022.
The major gainer of Nasdaq Composite was Lucid Group Inc. (LCID - Free Report) , shares of which advanced 10.3%. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 advanced 1.3% to end at 3,969.61. All 11 broad sectors of the benchmark index closed in positive territory. The Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE), the Technology Select Sector SPDR (XLK), the Materials Select Sector SPDR (XLB) and the Industrials Select Sector SPDR (XLI) appreciated 2.7%, 3.6%, 1.7%, 1.6% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 2.5% to 21.09. A total of 11.42 billion shares were traded on Wednesday, lower than the last 20-session average of 11 billion. Advancers outnumbered decliners on the NYSE by a 3.78-to-1 ratio. On Nasdaq, a 2.25-to-1 ratio favored advancing issues.
Peak Inflation Seems Behind Us
U.S. stock markets have been fluctuating since the beginning of 2023 after an extremely volatile 2022. The two major concerns of last year, namely, a 40-year high inflation rate and the Fed’s ultra-hawkish policies in the form of decades high interest rates and tighter monetary control, are persisting in 2023.
Nevertheless, peak inflation seems behind us. Less-than-expected inflation rates in October and November with respect to several measures and an unexpected drop in wage rate in December and November have clearly indicated this.
The Institute of Supply Management reported that the services sector index for December plummeted to 49.6% from 56.5% in November. The consensus estimate was 55.1%. Any reading below 50% indicates a contraction in services activities. The index contracted for the first time since May 2020, at the onset of the coronavirus pandemic.
A devastated housing market owing to the high mortgage rate, disappointing retail sales in December, the peak festive season, huge inventory accumulation by several retailers and a sharp fall in U.S. manufacturing activities indicated that the U.S. economy is cooling in the desired direction of the Fed. Several U.S. corporate giants have started retrenching manpower significantly at higher levels.
Q4 2022 Earnings Season in Focus
The fourth-quarter 2022 earnings season will kick start across all industries from Jan 13 as several banking and financial behemoths are slated to release their quarterly financial numbers. As of Jan 11, aggregate earnings of the S&P 500 Index are expected to be down by 7.6% year over year on 4% higher revenues.
Economic Data
For the week ended Jan 6, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 19 million barrels from the previous week. At 439.6 million barrels, U.S. crude oil inventories are about 1% above the five year average for this time of year.