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Stock Market News for Jul 14, 2023

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U.S. stocks closed sharply higher on Thursday to record their fourth straight day of gains led by a tech rally after fresh data showed that the producer price inflation slowed further in June. This raised hopes that the Fed could finally end its interest rate hike campaign. All three major indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) gained 0.1% or 47.71 points to end at 34,395.14 points.

The S&P 500 jumped 0.9% or 37.88 points to close at 4,510.04 points, finishing above the 4,500 mark for the first time since Apr 5, 2022, when it ended at 4,545.86 points. Communication services and tech stocks were the biggest gainers.

The Technology Select Sector SPDR (XLK) rose 1.3%. The Communication Services Select Sector SPDR (XLC) and Consumer Discretionary Select Sector SPDR (XLY) gained 1.5% and 0.9%, respectively. Ten of the 11 sectors of the benchmark index ended in positive territory.

The tech-heavy Nasdaq advanced 1.6% or 219.61 points to finish at 14,138.57 points.

The fear-gauge CBOE Volatility Index (VIX) was up 0.52% to 13.61. Advancers outnumbered decliners on the NYSE by a 2.90-to-1 ratio. On Nasdaq, a 1.93-to-1 ratio favored advancing issues. A total of 10.82 billion shares were traded on Thursday, lower than the last 20-session average of 11.11 billion.

Cooling Inflation Boosts Investors’ Confidence

Stocks extended their rally for the fourth consecutive session on Thursday as the latest batch of economic data showed that inflation eased further in June and the Fed’s aggressive interest rate hike stance managed to bring down inflation without pushing the economy into a recession.

The Bureau of Labor Statistics reported on Thursday that the producer price index (PPI) rose a modest 0.1% month over month in June, beating analysts’ expectation of an increase of 0.2%. Core PPI, which excludes the volatile energy and food prices, also rose 0.1%, which came in line with expectations.

The PPI data came a day after data showed that the consumer price index (CPI) rose 0.2% month over month in June, its slowest pace of increase since March 2021. The back-to-back data released over the week has raised hopes among investors that the Fed might finally end its interest rate hike campaign in the coming days.

The encouraging data saw borrowing costs dropping further, with the 10-year Treasury yield dropping to 3.759% after hovering around 4.1% at the beginning of the week. This is the lowest level since Jun 28.

Tech stocks led the rally with big tech companies recording gains. Shares of Microsoft Corporation ((MSFT - Free Report) ) gained 1.6%, while Netflix, Inc. ((NFLX - Free Report) ) advanced 1.4%. Also, Apple Inc. ((AAPL - Free Report) ) ended 0.4%. Microsoft has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Investors are now looking forward to the second-quarter earnings season, with some of the major banks scheduled to report their quarterly results.

Economic Data

In other economic data, the Labor Department reported that jobless claims totaled 237,000 for the week ending Jul 8, a decrease of 12,000 from the previous week’s revised level.  The previous week’s level was revised up by 1,000 to 249,000. The four-week moving average was 246,750, a decrease of 6,750 from the previous week’s revised average of 253,500.

Continuing claims came in at 1,729,000, an increase of 11,000 from the previous week’s revised level of 1,718,000. The 4-week moving average was 1,735,250 a decrease of 10,750 from the previous week's revised average of 1,746,000.


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