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Stocks rose on Tuesday as strong earnings and encouraging inflation data pushed the S&P 500 to its best January since 2019.
The Dow Jones Industrials flew 368.95 points, or 1.1%, to close Tuesday at 34,086.04.
The S&P 500 grabbed 58.83 points, or 1.5%, to 4,076.80.
The NASDAQ Composite popped 190.74 points, or 1.7%, to 11,584.55, for its best January since 2001.
Traders assessed how some of the largest firms are faring amid high inflation and fears of slowing consumer spending. General Motors shares jumped about 8.4% after the auto manufacture posted strong earnings. PulteGroup shares surged 9.4% after the homebuilder reported better-than-expected earnings. Shares of Exxon Mobil also rose nearly 2.2% following earnings.
Investors on Tuesday got bullish news on the inflation front before the Federal Reserve’s latest decision on interest rates. The employment cost index, which is an important measure of wages eyed by the Fed, showed compensation increased 1% in the fourth quarter. It was below the 1.1% estimate from Dow Jones. Traders widely expect a quarter-point increase in rates by the Fed, but they are hoping softening inflation will cause Chairman Jerome Powell to signal a pause in tightening in the near future.
Stocks have had a stellar start to 2023. The S&P 500 has improved about 6.2%, and Dow is ahead about 2.8% in January. Both indexes enjoyed their third positive month in four. The NASDAQ has risen nearly 10.7% this month for its best monthly performance since July.
A solid January could be a good sign for the market, and potentially foreshadow a continued uptick in the months that follow. Of the five instances in which the S&P gained more than 5% in January after a negative year, the benchmark index rose 30% for the year on average, so say the experts.
Investors are watching closely for comments on how some of the largest companies are faring amid high inflation and fears of slowing consumer spending.
The employment cost index, which is an important inflation measure for the Federal Reserve, showed compensation increased 1% in the fourth quarter. It was below the 1.1% estimate from the Dow Jones.
Attention also turns to the latest interest rate decision due out of the Federal Reserve’s latest policy meeting, which kicked off Tuesday.
Traders widely expect a 25-basis-point increase, but will monitor commentary for clues into how much further the Fed intends to hike, or when it plans to cut rates.
Prices for the 10-year Treasury moved higher, lowering yields to 3.50% from Monday’s 3.55%. Treasury prices and yields move in opposite directions.
Oil prices hiked $1.21 to $79.11 U.S. a barrel.
Gold prices gained $4.40 to $1,943.60 U.S. an ounce.
