From retail sales to inflation data – factors that helped rally in US stock market

US stock market Today: The S&P 500 ended higher on Wednesday after stronger-than-expected retail sales data offered evidence of resilience in the U.S. economy, but gains were capped as investors worried about more interest rate hikes by Federal Reserve in the months ahead.

A Commerce Department report showed retail sales surged 3 per cent in January as purchases of motor vehicles and other goods pushed the number well past the 1.8 per cent estimate from economists polled by Reuters.

On Tuesday, data showed U.S. consumer prices accelerated in January, boosting expectations that the Fed will raise the policy rate at least twice more this year to the 5-5.25 per cent range.

“The good news from retail, and broadly from the stronger economy, has been mostly priced in,” said Ross Mayfield, an investment strategist at Baird in Louisville, Kentucky. “At the same time, that strength has taken market expectations of rate cuts off the table and moved the terminal Fed funds rate a little bit higher.”

Fueled by a rebound in growth stocks that were hammered in last year’s stock market downturn, the S&P 500 (.SPX) has climbed 8 per cent so far in 2023, while the Nasdaq (.IXIC) has recovered 15 per cent. A better-than-expected quarterly earnings season has provided cautious optimism.

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More than half of all S&P 500 companies have reported quarterly earnings, and nearly 70 per cent of those have topped profit expectations, according to I/B/E/S data from Refinitiv. That compares to a long-term average of 66 per cent.

Apple (AAPL.O), Alphabet (GOOGL.O), Amazon (AMZN.O) and Tesla (TSLA.O) rose between 1.4 per cent and 2.4 per cent, driving gains in the S&P 500 and Nasdaq.

The S&P 500 climbed 0.28 per cent to end the session at 4,147.61 points. The Nasdaq gained 0.92 per cent to 12,070.59 points, while Dow Jones Industrial Average rose 0.11 per cent to 34,128.05 points.

Nine of the 11 S&P 500 sector indexes rose, led by a 1.2 per cent gain in consumer discretionary. Roblox (RBLX.N) soared 26 per cent after the gaming platform popular with kids topped quarterly bookings estimates.

U.S.-listed shares of Taiwan Semiconductor Manufacturing Co (TSMC) <TSM.N> fell 5.3 per cent after Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) slashed its stake in the chipmaker.

Shares of Airbnb Inc (ABNB.O) rose over 13 per cent after the company posted forecast-beating results due to strong travel demand.

Devon Energy (DVN.N) slumped about 10 per cent after the shale oil producer missed expectations for quarterly profit due to a hit to production from severe cold weather in the United States and higher expenses.

After the bell, Roku (ROKU.O) surged 14 per cent following a revenue forecast that beat analysts’ expectations. Across the U.S. stock market (.AD.US), advancing stocks outnumbered falling ones by a 1.4-to-one ratio.

The S&P 500 posted 19 new highs and no new lows; the Nasdaq recorded 84 new highs and 55 new lows. Volume on U.S. exchanges was relatively light, with 10.5 billion shares traded, compared to an average of 11.8 billion shares over the previous 20 sessions.

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