Wall Street ends higher, posts weekly gains ahead of Fed meeting

  • PCE: Inflation slows with consumer spending
  • American Express and Visa climb higher on solid demand
  • Chevron falls after missing earnings estimates
  • Indices up: Dow 0.08%, S&P 0.25%, Nasdaq 0.95%

NEW YORK, Jan 27 (Reuters) – Wall Street advanced on Friday, marking the end of a turbulent week in which economic data and corporate earnings forecasts pointed to slowing demand but also economic resilience ahead of the Federal Reserve’s monetary policy meeting next week.

All three major US equity indices ended the session in green, with the Nasdaq, powered by momentum megacap stocks, enjoying the biggest gain.

Since last Friday’s close, the S&P and Dow posted their third weekly gains in four, while the tech-laden Nasdaq posted its fourth straight weekly advance.

So far in the first weeks of 2023, the Nasdaq has jumped 11%, while the S&P 500 and Dow have gained 6% and 2.5% respectively.

«It’s a great end to another strong week in what’s shaping up to be a historically strong month,» said Ryan Detrick, chief market strategist at Carson Group in Omaha. «It’s a realization that inflation is continuing to decline rapidly and it alleviates a lot of concerns about the economy.»

The Commerce Department’s highly anticipated Personal Consumption Expenditure (PCE) report is broadly in line with consensus, showing slowing demand and slowing inflation – which is exactly what the restrictive rate hikes interest of the Federal Reserve aim to accomplish.

«(The PCE report) is another building block of inflation data we’ve seen recently,» Detrick added. “Supply chains continue to open up and improve, opening the door for the Fed to end its aggressive rate hike cycle.”

Fed Chairman Jerome Powell has made it clear that the central bank’s decades-long battle against high inflation is far from over. Financial markets still believe the central bank will raise the target federal funds rate by another 25 basis points at the end of next week’s policy meeting.

The fourth quarter earnings season is in full swing, with 143 of the S&P 500 companies reporting. Of these, 67.8% beat Street’s expectations, slightly better than the long-term average of 66%, but well below the 76% beat rate over the past four quarters, according to Refinitiv.

Analysts now see aggregate S&P 500 earnings falling 2.9% year-over-year, compared to the more moderate 1.6% annual decline seen on Jan. 1, according to Refinitiv.

The Dow Jones Industrial Average (.DJI) rose 28.67 points, or 0.08%, to 33,978.08, the S&P 500 (.SPX) gained 10.13 points, or 0.25%, to 4,070.56 and the Nasdaq Composite (.IXIC) added 109.30 points, or 0.95%, to 11,621.71.

Among the 11 major sectors of the S&P 500, Consumer Discretionary (.SPLRCD) led the percentage gains, while Energy (.SPNY) suffered the largest percentage loss, down 2%.

Shares of Intel Corp (INTC.O) plunged 6.4% after the chipmaker provided dismal earnings forecasts.

Chevron Corp (CVX.N) posted record earnings in 2022, but its fourth-quarter earnings fell short of expectations, dragging the stock down 4.4%.

Rival payment companies American Express Co (AXP.N) and Visa Inc (VN) reported better-than-consensus results, alleviating concerns about weaker consumer demand. Their shares jumped 10.5% and 3.0%, respectively.

Next week, in addition to the Fed meeting and January jobs data, a slew of high-level earnings reports are available, including from Apple Inc (AAPL.O), Amazon.com ( AMZN.O), Alphabet Inc (GOOGL.O), and Meta Platforms (META.O), among others.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.40 to 1; on the Nasdaq, a ratio of 1.34 to 1 favored advancers.

The S&P 500 posted 15 new 52-week highs and no new lows; the Nasdaq Composite recorded 94 new highs and 32 new lows.

Volume on U.S. exchanges was 11.88 billion shares, compared to an average of 11.10 billion over the past 20 trading days.

Reporting by Stephen Culp; Additional reporting by Bansari Mayur Kamdar, Johann M Cherian and Shreyashi Sanyal in Bengaluru; Editing by Aurora Ellis

Our standards: The Thomson Reuters Trust Principles.

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