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Wall Street closed sharply higher in a choppy session on Tuesday, led by tech and energy stocks. Investors weighed in the comments made by Fed Chair Jerome Powell on the state of the economy and the measures required to deal with it. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.8% or 265.67 points to close at 34,156.69. Twenty-two components of the 30-stock index ended in positive territory, while eight ended in negative.
The S&P 500 rose 1.3% or 52.92 points to close at 4,164.00. Eight of the 11 broad sectors of the benchmark index ended in positive territory. The Energy Select Sector SPDR (XLE), the Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) rose 3.3%, 2.5% and 1.9%, respectively, while the Consumer Staples Select Sector SPDR (XLP) fell 0.4%.
The tech-heavy Nasdaq added 1.9% or 226.34 points to finish at 12,113.79.
The fear-gauge CBOE Volatility Index (VIX) was down 4% to 18.66. A total of 12 billion shares were traded on Tuesday, in line with the last 20-session average. Advancers outnumbered decliners on the NYSE by a 1.68-to-1 ratio. On the Nasdaq, a 1.42-to-1 ratio favored advancing issues.
Investor Mood Improves After Powell’s Comments
In an event organized in Washington D.C. on Tuesday, Fed Chairman Jerome Powell said that inflation is beginning to ease, much to the delight of market participants. However, Powell said he expects the easing of inflation to be a long process and cautioned that interest rates could rise more than what markets are currently anticipating if the supporting economic indicators continue to show a robust economy.
“The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy,” Powell said, “But it has a long way to go. These are the very early stages.”
Investors were eagerly waiting for Powell’s comments at this meeting to get a sense of the direction the Fed would give the economy after the nonfarm payroll numbers turned out unusually high. His comments came in as a relief, and markets went up on it. The recent signals made by the Fed that it was on a path to loosen its grip on the monetary policy have been bolstered, although Powell does not expect something as drastic as rate cuts any time soon, certainly not before 2024. However, he does expect inflation to be on constant decline.
“We expect 2023 to be a year of significant declines in inflation. It’s actually our job to make sure that that’s the case,” he said. “My guess is it will take certainly into not just this year, but next year to get down close to 2%.”
Stocks that made the most of the day’s plunder were from the energy sector. Oil prices climbed more than 3% on Tuesday. Brent crude was up $2.70, or 3.3%, to $83.69/barrel, while WTI crude rose $3.03, or 4.1%, to $77.14/barrel. Tech stocks, which have been falling recently over recession worries, also staged a comeback.
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced on Tuesday that the goods and services trade deficit had increased to $67.4 billion in December. The November number had been revised to $61.0 billion.
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Stock Market News for Feb 8, 2023
Wall Street closed sharply higher in a choppy session on Tuesday, led by tech and energy stocks. Investors weighed in the comments made by Fed Chair Jerome Powell on the state of the economy and the measures required to deal with it. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.8% or 265.67 points to close at 34,156.69. Twenty-two components of the 30-stock index ended in positive territory, while eight ended in negative.
The S&P 500 rose 1.3% or 52.92 points to close at 4,164.00. Eight of the 11 broad sectors of the benchmark index ended in positive territory. The Energy Select Sector SPDR (XLE), the Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) rose 3.3%, 2.5% and 1.9%, respectively, while the Consumer Staples Select Sector SPDR (XLP) fell 0.4%.
The tech-heavy Nasdaq added 1.9% or 226.34 points to finish at 12,113.79.
The fear-gauge CBOE Volatility Index (VIX) was down 4% to 18.66. A total of 12 billion shares were traded on Tuesday, in line with the last 20-session average. Advancers outnumbered decliners on the NYSE by a 1.68-to-1 ratio. On the Nasdaq, a 1.42-to-1 ratio favored advancing issues.
Investor Mood Improves After Powell’s Comments
In an event organized in Washington D.C. on Tuesday, Fed Chairman Jerome Powell said that inflation is beginning to ease, much to the delight of market participants. However, Powell said he expects the easing of inflation to be a long process and cautioned that interest rates could rise more than what markets are currently anticipating if the supporting economic indicators continue to show a robust economy.
“The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy,” Powell said, “But it has a long way to go. These are the very early stages.”
Investors were eagerly waiting for Powell’s comments at this meeting to get a sense of the direction the Fed would give the economy after the nonfarm payroll numbers turned out unusually high. His comments came in as a relief, and markets went up on it. The recent signals made by the Fed that it was on a path to loosen its grip on the monetary policy have been bolstered, although Powell does not expect something as drastic as rate cuts any time soon, certainly not before 2024. However, he does expect inflation to be on constant decline.
“We expect 2023 to be a year of significant declines in inflation. It’s actually our job to make sure that that’s the case,” he said. “My guess is it will take certainly into not just this year, but next year to get down close to 2%.”
Stocks that made the most of the day’s plunder were from the energy sector. Oil prices climbed more than 3% on Tuesday. Brent crude was up $2.70, or 3.3%, to $83.69/barrel, while WTI crude rose $3.03, or 4.1%, to $77.14/barrel. Tech stocks, which have been falling recently over recession worries, also staged a comeback.
Consequently, shares of ConocoPhillips (COP - Free Report) and Microsoft Corporation (MSFT - Free Report) rose 4.2% each. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced on Tuesday that the goods and services trade deficit had increased to $67.4 billion in December. The November number had been revised to $61.0 billion.