- PCE: Inflation cools along with consumer spending
- American Express and Visa are up on solid demand
- Chevron falls after missing earnings estimates
- Indices up: Dow 0.08%, S&P 0.25%, Nasdaq 0.95%
NEW YORK, Jan 27 (Portal) – Wall Street advanced on Friday, marking the end of a rocky week in which economic data and corporate earnings forecasts pointed to slowing demand but also economic resilience ahead of the Federal Reserve’s monetary policy meeting in April indicated next week.
All three major US stock indices ended the session green, with the Nasdaq, fueled by megacap impulse stocks, posting the largest gain.
Since the close last Friday, the S&P and Dow posted their third weekly gains in four weeks, while the tech-laden Nasdaq recorded its fourth straight weekly gain.
So far in the first few weeks of 2023, the Nasdaq is up 11%, while the S&P 500 and Dow are up 6% and 2.5%, respectively.
“It’s a nice end to another solid week of a historically strong month,” said Ryan Detrick, chief market strategist at Carson Group in Omaha. “It’s a recognition that inflation continues to fall rapidly, easing many concerns about the economy.”
The much-anticipated Commerce Department report on personal consumption spending (PCE) came in broadly in line with consensus, showing weakening demand and cooling inflation – exactly what the Federal Reserve’s tightening rate hikes are intended to achieve.
“(The PCE report) is another building block of the inflation data we’ve seen recently,” Detrick added. “Supply chains continue to open and improve, opening the door for the Fed to end its aggressive cycle of rate hikes.”
However, Fed Chair Jerome Powell has made it clear that the central bank’s fight against decades of inflation is far from over. Financial markets still believe the central bank will hike the Fed’s interest rate by another 25 basis points at the end of next week’s monetary policy meeting.
The fourth quarter earnings season is in full swing, with 143 of the companies in the S&P 500 reporting. Of those, 67.8% beat Street expectations, according to Refinitiv, slightly better than the long-term average of 66% but well below the 76% hit rate over the past four quarters.
[1/2] A U.S. flag is seen in front of the New York Stock Exchange (NYSE) in New York City, the United States, January 26, 2023. Portal/Andrew Kelly
Analysts now expect headline earnings for the S&P 500 to fall 2.9% year over year, according to Refinitiv, compared to the more modest 1.6% annual decline on Jan. 1.
The Dow Jones Industrial Average (.DJI) was up 28.67 points, or 0.08%, to 33,978.08, the S&P 500 (.SPX) was up 10.13 points, or 0.25%, to 4,070.56 and the Nasdaq Composite (.IXIC) is up 109.30 points, up 0.95% to 11,621.71.
Among the 11 major sectors in the S&P 500, consumer discretionary (.SPLRCD) led the percentage gains, while energy (.SPNY) suffered the largest percentage loss, down 2%.
Intel Corp (INTC.O) shares tumbled 6.4% after the chipmaker posted gloomy earnings forecasts.
Chevron Corp (CVX.N) posted record earnings for 2022, but fourth-quarter results fell short of expectations, dragging the stock down 4.4%.
Rival payments firms American Express Co (AXP.N) and Visa Inc (VN) reported results that beat consensus, easing concerns about slowing consumer demand. Shares there rose 10.5% and 3.0%, respectively.
Next week, in addition to the Fed meeting and January jobs data, a slew of high-quality earnings reports are available, notably from Apple Inc (AAPL.O), Amazon.com (AMZN.O), Alphabet Inc (GOOGL.O ), and meta platforms (META.O).
Rising issues predominated on the NYSE at a 1.40 to 1 ratio; on the Nasdaq, a 1.34 to 1 ratio favored movers.
The S&P 500 posted 15 new 52-week highs and no new lows; the Nasdaq Composite posted 94 new highs and 32 new lows.
Volume on US exchanges was 11.88 billion shares, compared to the average of 11.10 billion over the past 20 trading days.
Reporting by Stephen Culp; Additional reporting by Bansari Mayur Kamdar, Johann M. Cherian and Shreyashi Sanyal in Bengaluru; Editing by Aurora Ellis
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