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Friday, January 27, 2023

US Stock Market: Wall Street Extends Rally, Fueled by Tech Rebound

Wall Street closed sharply higher on Monday, led by higher technology shares, as investors began a week of big gains with renewed enthusiasm for market-leading stocks that took a hit last year.

All three major stock indices extended gains on Friday, with the tech-heavy Nasdaq leading the way, buoyed by semiconductor stocks.

“(Tokens are) a group that has been down, so I’m not too surprised,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “We’re going to see earnings for these companies over the next two weeks and that’s where the rubber meets the road.”

“It’s a group that was ripe for a rebound.”

The session marks a calm before the storm in a week packed with high-profile earnings reports and a back-end loaded with crucial economic data.

Investors are almost certain that the Federal Reserve will implement a small interest rate hike next week, even as the US central bank remains committed to reining in the most intense inflation cycle in decades.

“(Investors) are pretty comfortable that they’re going to see lower rate hikes from the Fed, that we’re turning around inflation and interest rate hikes,” Tuz added. “Stocks can do well in that environment, especially the high-growth stocks that drive the market.” Financial markets have priced in a 99.9% probability of a 25 basis point hike in the federal funds target rate at the conclusion of their two-day policy meeting next Wednesday, according to CME’s FedWatch tool.

The Dow Jones Industrial Average rose 254.07 points, or 0.76%, to 33,629.56, the S&P 500 gained 47.2 points, or 1.19%, to 4,019.81 and the Nasdaq Composite added 223, 98 points, or 2.01%, at 11,364.41.

Of the 11 major sectors in the S&P 500, all but energy finished in the green, with technology stocks enjoying the biggest percentage gain, up 2.3% on the session.

The fourth-quarter reporting season has picked up pace, with 57 of the companies in the S&P 500 posting results. Of those, 63% have generated better-than-expected earnings, according to Refinitiv.

Analysts now see fourth-quarter earnings for the S&P 500 as a whole falling 3% year-over-year, nearly double the 1.6% annual drop seen earlier in the year, according to Refinitiv.

This week, Microsoft Corp and Tesla Inc, along with a number of heavy-hitting industries including Boeing CO, 3M Co, Union Pacific Corp, Dow Inc and Northrop Grumman Corp, are expected to release quarterly results.

Philadelphia’s SE Semiconductor Index jumped 5.0%, its biggest one-day gain since November 30, after Barclays upgraded the sector’s rating to “overweight” from “equal weight.”

Tesla rose 7.7% after Chief Executive Elon Musk took the stand in his fraud trial related to a tweet saying he had support to take the electric carmaker private. Baker Hughes Co missed quarterly earnings estimates due to inflationary pressures and ongoing disruptions due to Russia’s war against Ukraine. He

The company’s shares fell 1.5%.

Cloud-based software company Salesforce Inc jumped 3.1% on news that activist investor Elliot Management Corp has taken a multi-billion dollar stake in the company. Spotify Technology SA joined the growing list of technology-related companies to announce impending job cuts, cutting 6% of its workforce as rising interest rates and the looming possibility of a recession continue to pressure companies. growth stocks. Shares of the music streaming company rose 2.1%.

On the economic front, the US Commerce Department is expected to release its initial “snapshot” version of fourth-quarter GDP on Thursday, which analysts expect to come in at 2.5%.

On Friday, the comprehensive Personal Consumption Expenditure (PCE) report will shed light on consumer spending, income growth and, most importantly, inflation.

Advancing issuances outnumbered declining ones on the New York Stock Exchange by a ratio of 2.77 to 1; on Nasdaq, a 1.73-to-1 ratio favored advancers.

The S&P 500 posted 11 new 52-week highs and no new lows; the Nasdaq Composite posted 82 new highs and 19 new lows.

Volume on US exchanges was 11.99 billion shares, compared with an average of 10.62 billion over the past 20 trading days.

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