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Stocks Rise as Inflation Data is Revised Lower

Stocks saw a positive uptick on Friday as December’s revised inflation data came in lower than initially reported. The S&P 500 closed above the key 5,000 level, fueled by strong earnings and ongoing positive economic news.

The S&P 500 rose by 0.57 percent to end the day at 5,026.61, while the Nasdaq Composite rallied 1.25 percent to close at 15,990.66. However, the Dow Jones Industrial Average slipped by 0.14 percent, settling at 38,671.69.

For the week, the S&P 500 added 1.4 percent and the Nasdaq gained 2.3 percent. On the other hand, the Dow finished the week flat. It is noteworthy to mention that all three major averages achieved their fifth consecutive winning week and marked their 14th positive week out of the last 15.

While a solid earnings season, easing inflation data, and a resilient economy have been driving factors behind the market rally in 2024, the S&P’s climb above the 5,000 level is particularly noteworthy. The index initially touched this milestone during Thursday’s session. A similar milestone was reached in April 2021 when the index first crossed the 4,000 mark.

The revision of December’s consumer price index, which was adjusted to a 0.2 percent increase from the previously reported 0.3 percent increase, also contributed to positive sentiment in the market. It is worth noting that core inflation figures, excluding food and energy, remained the same. Investors now await the release of January’s CPI figures next week for further insights into inflation trends.

Technology stocks, specifically megacap companies, saw gains on Friday, driving the S&P above the 5,000 level. Nvidia rose by 3.6 percent, Alphabet added over 2 percent, and Cloudflare soared by 19.5 percent on strong earnings. Semiconductor stocks also experienced an increase, with the VanEck Semiconductor ETF (SMH) rising by 2.2 percent.

Despite a few negative reports from companies such as PepsiCo, Take-Two Interactive, and Pinterest, overall earnings have proven to be more robust than expected. According to LSEG, 81 percent of the 332 S&P companies that have reported results thus far have exceeded analyst expectations. This beat rate surpasses the average of 67 percent in a typical quarter since 1994.

In conclusion, stocks have risen on the back of lower revised inflation data. The positive momentum has been fueled by solid earnings, easing inflation, and a resilient economy. Investors remain optimistic about the future of the market as major indices continue to surpass key milestones.

FAQ Section:

Q: What caused the positive uptick in stocks on Friday?
A: The positive uptick in stocks on Friday was caused by December’s revised inflation data coming in lower than initially reported, strong earnings, and ongoing positive economic news.

Q: What were the closing values of the major stock indices on Friday?
A: The S&P 500 closed above the key 5,000 level at 5,026.61, while the Nasdaq Composite closed at 15,990.66. However, the Dow Jones Industrial Average slipped and settled at 38,671.69.

Q: How did the major indices perform for the week?
A: The S&P 500 added 1.4 percent for the week, the Nasdaq gained 2.3 percent, and the Dow finished the week flat.

Q: What milestone did the S&P 500 reach?
A: The S&P 500 climbed above the 5,000 level, which is particularly noteworthy as it had previously touched this milestone during Thursday’s session and crossed the 4,000 mark in April 2021.

Q: What contributed to positive sentiment in the market?
A: The revision of December’s consumer price index, which showed a lower increase than initially reported, contributed to positive sentiment in the market.

Q: Which technology stocks saw gains on Friday?
A: Technology stocks, specifically megacap companies, saw gains on Friday. Nvidia rose by 3.6 percent, Alphabet added over 2 percent, and Cloudflare soared by 19.5 percent on strong earnings.

Q: How have overall earnings been for companies?
A: Overall earnings have proven to be more robust than expected, with 81 percent of the S&P companies that have reported results surpassing analyst expectations.

Key Definitions:

– S&P 500: A stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.
– Nasdaq Composite: A stock market index that includes all the common stocks and similar securities listed on the Nasdaq stock market.
– Dow Jones Industrial Average: A stock market index that measures the stock performance of 30 large publicly-owned companies based in the United States.
– Consumer Price Index (CPI): A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
– Core Inflation: A measure of inflation that excludes volatile food and energy prices.
– VanEck Semiconductor ETF (SMH): An exchange-traded fund that tracks the performance of a basket of semiconductor stocks.

Suggested Related Links:
S&P 500 – Investopedia
Nasdaq Stock Market
Dow Jones Industrial Average – Investopedia
Consumer Price Index (CPI) – Bureau of Labor Statistics
Core Inflation – Investopedia
VanEck Semiconductor ETF (SMH) – VanEck