US Stocks Close Out Strong Week 01/27 16:02
A strong week for Wall Street closed out with modest gains Friday, sending
the stock market to its highest level since early December.
NEW YORK (AP) -- A strong week for Wall Street closed out with modest gains
Friday, sending the stock market to its highest level since early December.
The S&P 500 rose 0.2% to clinch its third winning week in the last four and
was near its highest level since the summer, before fading at the end of the
day. It's rallied through January on growing belief inflation is on a steady
downswing, hopefully leading to less pressure on the economy and markets.
The Dow Jones Industrial Average rose 28 points, or 0.1%, while the Nasdaq
composite gained 0.9%.
Helping to lead the way was American Express, which jumped 10.5% despite
reporting weaker profit and revenue for the latest quarter than expected. It
gave a forecast for earnings through 2023 that topped Wall Street's
expectations and announced a planned increase to its dividend.
Another big gain for Tesla's stock also supported the market. It rose 11%
following its stronger-than-expected profit report for the end of 2022 released
earlier in the week.
They helped offset a 6.4% loss for Intel following a jarring warning from
the chipmaker. Not only did its revenue and earnings fall short of expectations
last quarter, it also gave a forecast for revenue this quarter more than $2
billion below analysts' expectations.
All told, the S&P 500 rose 10.13 points to 4,070.56. The Dow climbed 28.67
to 33,978.08, and the Nasdaq gained 109.30 to 11,621.71.
Hasbro fell 8.1% after saying it "underperformed" in this past holiday
shopping season and will likely report a 17% drop in revenue for the fourth
quarter. The company will cut about 1,000 jobs to reduce costs.
So far, the job market has remained remarkably resilient despite a slowing
overall economy. Almost all of the high-profile layoff announcements have been
within the tech industry, which raced to expand after the pandemic sent demand
for technology soaring.
Earnings reporting season is entering its heart, and companies have been
offering mixed results and forecasts. That's helped lead to some big swings in
Two competing big ideas have been sending Wall Street veering recently. On
one hand are worries about a steep drop-off in profits and a severe recession
for the economy following all the Federal Reserve's increases to interest rates
last year meant to crush inflation. On the other are hopes that cooling
inflation may allow the Fed to take it easier on rates.
The market is partly trying to reconcile that weak earnings and a drop in
demand may be necessary for inflation to keep cooling, said Keith Buchanan,
portfolio manager at Globalt Investments.
"It's kind of like this is the medicine the economy has to take," he said.
Economic reports on Friday backed up recent data points suggesting inflation
continues to moderate. The measure the Fed prefers, which doesn't count food
and energy costs, was 4.4% higher in December than a year earlier. That was
down from 4.7% inflation in November.
Reports also showed that income growth for Americans slowed in December,
while consumer spending fell off a bit more sharply than expected.
A separate report said U.S. consumers are also downshifting their
expectations for inflation in the coming year. Over the long run, the
University of Michigan said inflation expectations remain roughly where they've
been for most of the last 18 months.
Economists said Friday's data likely keeps the Fed on track to raise its key
benchmark rate by 0.25 percentage points at its meeting next week. That would
be a step down from its increase of 0.50 points last month and four straight
hikes of 0.75 points before that.
Smaller increases would mean less added pressure on the economy, which has
already seen damage done to the housing industry and other areas because of
last year's surge in rates.
The yield on the 10-year Treasury, which sets rates for mortgages and other
important loans, held steady at 3.51%. The two-year yield, which moves more on
expectations for Fed actions, held at 4.19%.
Next week could be another busy one for markets, with several high-profile
events on top of the Fed's announcement. The European Central Bank will give
its latest decision on rates, the U.S. government will release its latest
monthly check on the jobs market and more than 100 companies in the S&P 500
will report their quarterly results.
In stock markets overseas, India's Sensex fell 1.5% as the Adani Group was
again hit by heavy selling. Shares in seven Adani companies have plunged this
week, wiping out billions of dollars in market value, after short-selling firm
Hindenburg Research said it was betting against the conglomerate, which has
holdings in energy, data transmission, construction and other major industries.
The Adani Group said it was considering legal action against Hindenburg
following its allegations of stock market manipulation and accounting fraud.