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S&P 500 is falls slightly as investors digest latest economic data

Traders work on the floor of the New York Stock Exchange during morning trading on January 17, 2023 in New York City. 

Michael M. Santiago | Getty Images

The S&P 500 rose on Wednesday after the latest data provided another sign that inflation, while still high, is beginning to ease.

The broad market index climbed 0.4%, while the Nasdaq Composite advanced 0.9% and was going for its eighth straight up day. Meanwhile, the Dow Jones Industrial Average fell 95 points, or 0.3%.

The moves came after the latest reading on the producer price index, which measures input costs from companies and could be a leading indicator of future inflation, showed a 0.5% decline for December. Economists surveyed by Dow Jones expected a 0.1% decline. That gave relief to investors who have hoped for inflation to retreat and for the Federal Reserve to slow or stop its rate hikes.

“While the Fed remained hawkish throughout 2022 in moving rates aggressively higher to rein in inflation, the December PPI print bodes well for an easing by the Fed of its recently very tight monetary policy,” said Greg Bassuk, CEO at AXS Investments.

“With a consensus still in place for the Fed to raise rates again in February, the declining inflation figures represent a powerful data point supporting the likelihood that the Fed’s rate hike actions will begin winding down here in 2023,” he added.

U.S. Treasury yields fell after the data was released, which gave a lift to growth-oriented stocks like Tesla and Plug Power. Amazon rose more than 1% even as it began a big round of layoffs Wednesday.

Elsewhere, shares of United Airlines rose after the company beat Wall Street’s estimates in the latest quarter, propelled by strong travel demand.

Meanwhile, shares of Moderna jumped after the pharmaceutical company said its vaccine targeting respiratory syncytial virus can prevent the disease in older adults.

On Tuesday the Dow closed lower, snapping a four-day win streak. The S&P 500 fell too, while the Nasdaq finished its seventh straight positive day in a row. Those moves follow earnings results from big banks that suggested diverging paths ahead even for names within the same sector.

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