Stocks Gain Ground in a Volatile Trading Day…..
U.S. equities ended higher in a choppy trading session as uncertainty remained regarding the ultimate economic impact of aggressive global central bank tightening. The volatile session followed yesterday’s release of the minutes from the Fed’s February monetary policy meeting, which suggested that the Central Bank may need to continue its rate hike campaign to try to tame inflation. In economic news, jobless claims came in below expectations, and Q4 GDP growth was unexpectedly revised lower and the inflation components came in well above estimates. Treasury yields were mostly lower in choppy trading, and the U.S. dollar was mostly unchanged, while crude oil prices increased after a string of losses, and gold moved to the downside. Q4 earnings season continued down the home stretch, as Nvidia Corporation rallied after topping estimates and offering upbeat Q1 revenue guidance. Elsewhere, eBay matched earnings forecasts but its outlook garnered scrutiny, and Domino’s Pizza fell after missing revenue forecasts and adjusting its guidance lower. Asian stocks finished mostly lower, though Japan was closed for a holiday, and markets in Europe were mixed as investors around the globe grappled with the outlook for monetary policies.
The Dow Jones Industrial Average rose 109 points (0.3%) to 33,154, the S&P 500 Index went up 21 points (0.5%) to 4,012, and the Nasdaq Composite increased 83 points (0.7%) to 11,590. In moderate volume, 3.9 billion shares of NYSE-listed stocks were traded, and 4.6 billion shares changed hands on the Nasdaq. WTI crude oil gained $1.44 to $75.39 per barrel. Elsewhere, the gold spot price went down $11.10 to $1,830.40 per ounce, and the Dollar Index was mostly unchanged at 104.57.
Weekly initial jobless claims came in at a level of 192,000 for the week ended February 18, below the Bloomberg consensus estimate of 200,000 and the prior week’s upwardly revised 195,000 level. The four-week moving average rose 1,500 to 191,250, and continuing claims for the week ended February 11 fell by 37,000 to 1,654,000, south of estimates calling for 1,700,000. The four-week moving average of continuing claims declined by 3,000 to 1,668,750.
The second look (of three) at Q4 Gross Domestic Product, the broadest measure of economic output, showed a 2.7% quarter-over-quarter (q/q) annualized rate of expansion, versus expectations to be unrevised at the first estimate of 2.9% growth. Personal consumption was adjusted solidly lower to a 1.4% increase, compared to estimates of an adjusted 2.0% gain, from the prior reading of a 2.1% growth rate.
On inflation, the GDP Price Index rose 3.9%, higher than expectations for it to remain at the prior read’s 3.5% gain. The core PCE Price Index, which excludes food and energy, marked a 4.3% growth rate, above expectations to match the prior reading of a 3.9% rise.
Treasury rates were mostly lower, as the yield on the 2-year note was unchanged at 4.70%, while the yield on the 10-year note dipped 4 basis points (bps) to 3.88%, and the 30-year bond rate decreased 5 bps to 3.88%.
©2023 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.
Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.