Benchmarks closed in the green on Wednesday for fourth straight trading days, registering their best such feat in more than five weeks. Markets managed to rebound after declining initially following better-than-expected consumer prices report, a key inflation metric. Strong earnings season and steady economy led all the three key indexes to shrug off their yearly declines to close in positive territory.
How the Benchmarks Fared?
The Dow Jones Industrial Average (DJI) increased 1%, or 254.41 points, to close at 24,893.49. The S&P 500 rose 1.4% to close at 2,698.63. The tech-laden Nasdaq Composite Index closed at 7,143.62, gaining 1.9%. The fear-gauge CBOE Volatility Index (VIX) decreased 2% to close at 19.24. A total of 7.8 billion shares were traded on Wednesday, lower than the last 20-session average of 8.4 billion shares. Advancers outnumbered decliners on the NYSE by a 2.28-to-1 ratio. On Nasdaq, a 2.94-to-1 ratio favored advancing issues.
Markets Recover for Fourth Straight Day
All the key U.S. indexes rebounded and increased for the fourth consecutive trading day after entering correction territory last week. Although, the movement lacked specific catalysts, some of the day’s gains were fueled by strong earnings season and steady strengthening in the U.S. economy.
Moreover, the Cboe fear-gauge index, (VIX) came below 20 for the first time since Feb 5. A reading below 20 is considered soothing and with volatility getting reduced, key indexes took a breather on Wednesday. For the S&P 500, eight of the 11 key sectors increased on Wednesday, with financials and technology stocks leading the way.
Increase in the consumer prices index (CPI) raised rate hike chances as early as Fed’s next policy meeting in March. The Bureau of Labor Statistics reported that CPI and core-CPI gained 0.5% and 0.3%, respectively, in January, better than their respective consensus estimates. Consumer inflation index posted its best increase in five months. But, year-over-year rise in CPI was 2.1% in January, same as December’s figure. Further, year-over-year increase in core CPI was 1.8%, lower than Fed’s desired target of 2%.
Nevertheless, possibility of an imminent rate hike led the Financial Select Sector SPDR (XLF) to advance 2.4%, becoming the best performing sector in the S&P 500. Dow components, JPMorgan Chase & Co. (JPM - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) rose 2.3% and 2.8%, respectively.
Additionally, the Technology Select Sector SPDR (XLK) soared 1.8%, becoming the second biggest gainer among the key S&P 500 sectors. FAANG stocks, Facebook, Inc. (FB - Free Report) , Apple Inc. (AAPL - Free Report) , Amazon.com, Inc. (AMZN - Free Report) , Netflix, Inc. (NFLX - Free Report) and Alphabet Inc. (GOOGL - Free Report) increased 3.7%, 1.8%, 2.6%, 3% and 1.8%, respectively.
Separately, retail sales lost 0.3% to $492.0 billion in January, in contrast to the consensus estimate of an increase of 0.2%. Sales also rose 3.6% from the year ago level. However, excluding auto sales, the metric remained unchanged.
Stocks That Made Headline
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