Stocks are slightly higher as investors eye the next inflation report and earnings season

Stocks posted modest gains on Tuesday as investors waited for economic data and corporate earnings later in the week for signs of how the Federal Reserve will hike interest rates going forward.

The Dow Jones Industrial Average gained 45 points, or 0.14%. The S&P 500 was also up 0.25%, while the Nasdaq Composite was up 0.43%.

The S&P 500 is up about 1.1% in the first five trading days of 2023 through Monday, which some are saying bodes well for the rest of the year. The Nasdaq has rallied in recent days as optimism about slowing inflation drove investors to troubled tech stocks.

Billionaire investor Paul Tudor Jones expressed optimism in the stock market Tuesday morning, saying the Federal Reserve is unlikely to slow the economy and halt rate hikes before it does. Jones, who said he wasn’t making any specific guidance, said there was huge demand for shares from share buybacks and mergers on the way this year.

“They probably have close to a trillion dollars of excess demand in US stocks,” Jones said on CNBC’s “Squawk Box” on Tuesday. “Where is the sales going to go to offset these claims that come from buybacks, from the corporate positions, from a combination of buybacks and mergers and acquisitions? That’s a significant amount. Ceteris paribus, all things being equal, the stock market would go up 7% or 8% this year.”

Investors entered the new year with concerns that higher Fed interest rates could plunge the economy into recession. but many seem to be betting that inflation will ease in the early days of 2023. Later in the week they will watch CPI data next Thursday and big bank earnings on Friday.

“We’re probably going to be in this really tight range and most likely directionless until we’re done with the CPI report at least Thursday and then kick off earnings season, which is also later this week,” said Megan Horneman, chief investment officer at Verdence Capital Advisers. “Right now I just think the market is kind of in the midst of waiting for the economic data and absorbing some of the Fed’s speech.”