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U.S. stock markets closed higher on Thursday following a favorable inflation data of December. Market participants were hopeful that the magnitude of the hike in the benchmark interest rate by the Fed will be reduced in 2023. All the three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.6% or 216.96 points to close at 34,189.97. Notably, 19 components of the 30-stock index ended in positive territory while the remaining 11 in red. The blue-chip index closed above 34,000 level for the first time since Dec 13, 2022.
The tech-heavy Nasdaq Composite finished at 11,001.10, advancing 0.6% or due to strong performance of large-cap technology stocks. The tech-laden index posted a five-day winning streak, for the first time since September 2022. Moreover, the index ended above 11,000 level for the first time since Dec 14, 2022.
The S&P 500 rising 0.3% to end at 3,983.17. Eight of the 11 broad sectors of the benchmark index closed in positive territory while three in negative zone. The Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE) and the Energy Select Sector SPDR (XLE) appreciated 1.1%, 1.1% and 1.9%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 10.7% to 18.83. A total of 12.14 billion shares were traded on Thursday, lower than the last 20-session average of 10.88 billion. Advancers outnumbered decliners on the NYSE by a 3.75-to-1 ratio. On Nasdaq, a 2.50-to-1 ratio favored advancing issues.
Inflation Seems Declining
The Department of Labor reported that the consumer price Index (CPI) dropped 0.1% in December, inline with the consensus estimate. CPI increased 0.1% in November. This marked the largest monthly decline of the inflation gauge since April 2020.
Year over year, the headline CPI jumped 6.5% in December compared with 7.1% in November. Month wise, this marked the lowest annual increase since October 2021 and a sharp drop from the 40-year high of 9.1% in last summer.
The core CPI (excluding the volatile food and energy items) rose 0.3% in December, in line with the consensus estimate. Core CPI increased 0.2% in November. Year over year, core CPI climbed 5.7%, in line with the consensus mark.
Market participants are expecting the Fed to reduce the magnitude of the benchmark interest rate hike in February FOMC meeting. As of Jan 12, the CME FedWatch showed there exists 96.2% probability of a 25 basis points hike in February compared with 77% a day ago.
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.
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 and services 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.
Economic Data
The Department of Labor reported that weekly jobless claims dropped 1,000 to 205,000 compared with the consensus estimate of 215,000. Previous week’s data was revised upward by 2,000 to 206,000. Continuing claims (those who already received government grants and reported one week back) decreased 63,000 to 1.634 million for the week ended Dec 31,2022.
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Stock Market News for Jan 13, 2023
U.S. stock markets closed higher on Thursday following a favorable inflation data of December. Market participants were hopeful that the magnitude of the hike in the benchmark interest rate by the Fed will be reduced in 2023. All the three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.6% or 216.96 points to close at 34,189.97. Notably, 19 components of the 30-stock index ended in positive territory while the remaining 11 in red. The blue-chip index closed above 34,000 level for the first time since Dec 13, 2022.
The tech-heavy Nasdaq Composite finished at 11,001.10, advancing 0.6% or due to strong performance of large-cap technology stocks. The tech-laden index posted a five-day winning streak, for the first time since September 2022. Moreover, the index ended above 11,000 level for the first time since Dec 14, 2022.
The major gainer of Nasdaq Composite was MercadoLibre, Inc. (MELI - Free Report) , shares of which climbed 9.3%. 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 rising 0.3% to end at 3,983.17. Eight of the 11 broad sectors of the benchmark index closed in positive territory while three in negative zone. The Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE) and the Energy Select Sector SPDR (XLE) appreciated 1.1%, 1.1% and 1.9%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 10.7% to 18.83. A total of 12.14 billion shares were traded on Thursday, lower than the last 20-session average of 10.88 billion. Advancers outnumbered decliners on the NYSE by a 3.75-to-1 ratio. On Nasdaq, a 2.50-to-1 ratio favored advancing issues.
Inflation Seems Declining
The Department of Labor reported that the consumer price Index (CPI) dropped 0.1% in December, inline with the consensus estimate. CPI increased 0.1% in November. This marked the largest monthly decline of the inflation gauge since April 2020.
Year over year, the headline CPI jumped 6.5% in December compared with 7.1% in November. Month wise, this marked the lowest annual increase since October 2021 and a sharp drop from the 40-year high of 9.1% in last summer.
The core CPI (excluding the volatile food and energy items) rose 0.3% in December, in line with the consensus estimate. Core CPI increased 0.2% in November. Year over year, core CPI climbed 5.7%, in line with the consensus mark.
Market participants are expecting the Fed to reduce the magnitude of the benchmark interest rate hike in February FOMC meeting. As of Jan 12, the CME FedWatch showed there exists 96.2% probability of a 25 basis points hike in February compared with 77% a day ago.
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.
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 and services 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.
Economic Data
The Department of Labor reported that weekly jobless claims dropped 1,000 to 205,000 compared with the consensus estimate of 215,000. Previous week’s data was revised upward by 2,000 to 206,000. Continuing claims (those who already received government grants and reported one week back) decreased 63,000 to 1.634 million for the week ended Dec 31,2022.