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More pearls of wisdom from this week's U.S. News Invested.  

S&P 500 ends at highest in month, indexes gain for week as earnings kick off

Opening nearly 300 points down, the Dow immediately gained traction and rose all day long to yet another 3-digit gain for a fourth day in a row.  The banks, which were expected to show lower Q4 earnings, instead surprised with JP Morgan and BofA coming in above while Wells Fargo and Citigroup fell short.  Still, the results boosted the bank index by 1.6% and the S&P to a 2.7% gain for the week.  As expected, the banks had stockpiled rainy day funds as a hedge against recession and investment banking reporting was weak.

Wall St ends up as data suggests inflation may be on downward trend

Today’s CPI report told investors exactly what they wanted to hear – inflation is coming down.  Prices fell for the first time in 2-1/2 years and that bolstered another handsome 3-digit gain in the Dow and puts the odds of a ¼ point February rate hike at 91% vs 77% yesterday, after a flurry of ¾ point hikes last year and capped by a ½ point hike in December. Today’s expert states, “The CPI data confirms inflation in a downward trend and that it has reversed.”  Volume was above average at 12.14 billion. 

Wall Street ends sharply higher on optimism before key inflation report

It was a straight shot up on all three indexes as optimism continues that Thursday’s CPI report will show inflation continuing a downward trend, spurring more optimism that it will bring a pause in rate hikes sooner than later. The market is up so far this year but, as today’s expert put it, “any time you have a down year, it’s not surprising to have a reversal at the start of the new year.” The banks will begin Q4 reporting later this week and are expected to have lower quarterly earnings. Volume was a tad above average at 11.4 billion. 

Wall Street ends higher, Powell comments avoid rate policy

Today all it took to zoom the Dow and Nasdaq up to 3-digit gains was for Powell to keep his mouth shut. The old saying “no news is good news” is precisely what drove the market today when Powell refrained from even mentioning rate policy in today’s speech. “Good news” is exactly how his sparseness of commentary was taken today sparking hopes that if Thursday’s CPI report is also good news that it might get the Fed’s attention on inflation which shows some indication of slowing significantly.  Also big on the radar are the big banks due for their Q4 reports later this week. The forecast is currently for a 2.2% decline in earnings for Q4.  Volume was below average at 10.02 billion. 

S&P 500 near flat as investors weigh chances of less aggressive rate hikes

The indexes were up, way up, most of the day, the Dow reaching a height of +300 by noon, before beginning a steady decline to break-even by 3 and closing down 112.  It was profit-taking in the morning reacting to Friday’s jobs report and then bet hedging in the afternoon anticipating a less than stellar CPI report later this week.  The consensus remains for high 77% odds of another ¼ point rate hike in February.  Volume was a little above average at 11.3 billion. 

2023 Investment Outlook: When Will the Stock Market Recover?

With the new year now just out the gate, this week's edition of U.S. News Invested is particularly relevant for Big Picture enthusiasts as it offers insights on the new year's prospects for a market recovery.  Hope everyone has enjoyed their weekend.