- Weekly US jobless claims rise
- Producer price data cooler than expected
- Netflix jumps after Wedbush sees revenue growth
- Harley-Davidson collapses as CFO resigns
- Indexes up: Dow 1.14%, S&P 1.33%, Nasdaq 1.99%
April 13 (Reuters) – US stocks ended sharply higher on Thursday as economic data showed a slowdown in inflation and an easing in the labor market, fueling optimism that the Federal Reserve may be nearing the end of its aggressive cycle of interest rate hikes.
All three major U.S. stock indexes were up more than 1%, with rate-sensitive megacaps including Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Amazon.com (AMZN.O) showing the strongest upside potential and leading the uptrend The tech-heavy Nasdaq rose nearly 2% for its biggest one-day percentage jump in nearly a month.
Data released before the bell showed a stronger-than-expected slowdown in producer prices and new jobless claims that came in above consensus. Both are signaling that the Fed’s hawkish barrage of rate hikes that began over a year ago is working as intended.
The data follows Wednesday’s muted CPI report, which cemented the likelihood of another 25 basis point rate hike at the conclusion of next month’s Federal Open Market Committee policy meeting.
“Markets rallied today after this morning’s lower inflation data as it’s still all about the Fed, so it’s really all about inflation,” said David Carter, investment specialist at JPMorgan Private Bank in New York.
“Coupled with yesterday’s muted CPI data, the PPI is also pointing to some deceleration in inflation, which could spell a quick end to Fed tightening.”
inflation
According to CME’s FedWatch tool, financial markets are pricing in about a one-in-three chance that the central bank will hit the pause button and keep the Fed’s policy rate in the 4.75% to 5.00% range.
Investor focus now shifts to the first-quarter earnings season, which kicks off on Friday when a trio of big banks, Citigroup (CN), JPMorgan Chase & Co (JPM.N), Wells Fargo & Co (WFC .N), reported .
“Tomorrow’s bank earnings could provide insight into the strength of regional banks and future lending,” Carter added. “It will be interesting to see what the banks say about future economic growth tomorrow.”
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. March 23, 2023. REUTERS/Brendan McDermid
Analysts expect overall S&P 500 first-quarter earnings to come in 5.2% below the year-ago quarter, a sharp reversal from the 1.4% year-over-year growth seen earlier in the quarter, according to Refinitiv.
The Dow Jones Industrial Average (.DJI) rose 383.19 points, or 1.14%, to 34,029.69; the S&P 500 (.SPX) rose 54.27 points, or 1.33%, to 4,146.22; and the Nasdaq Composite (.IXIC) added 236.94 points, or 1.99%, to 12,166.27.
Among the 11 major sectors of the S&P 500, all but real estate (.SPLRCR) ended the session higher, with communications services (.SPLRCL) and consumer discretionary (.SPLRCD) posting the largest gains, both up 2.3%.
Delta Air Lines Inc (DAL.N) shares fell 1.1% after the company failed to report a profit in the first quarter.
Harley-Davidson Inc (HOG.N) shares fell 1.7% after the motorcycle maker announced that Chief Financial Officer Gina Goetter would be leaving the company at the end of April.
Groupon Inc (GRPN.O) rose 4.0% after the company named Jiri Ponrt to succeed Damien Schmitz as chief financial officer.
Netflix Inc (NFLX.O) rose 4.6% after Wedbush said the streaming platform’s revenue growth from new subscribers could boost profitability.
Upgrading issues predominated on the NYSE at a ratio of 2.71 to 1; on the Nasdaq, a 2.55 to 1 ratio favored movers.
The S&P 500 posted 12 new 52-week highs and a new low; the Nasdaq Composite posted 69 new highs and 140 new lows.
Volume on US exchanges was 10.40 billion shares, compared to the average of 11.51 billion over the past 20 trading days.
Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru; Edited by Sriraj Kalluvila and Shounak Dasgupta
Our standards: The Thomson Reuters Trust Principles.
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