Wednesday was a good day for stocks as traders thought about what strong retail sales and the latest inflation numbers mean for the Federal Reserve’s plan to raise interest rates.
The Dow Jones Industrial Average climbed 38.78 points, or 0.11%, to settle at 34,120.05, gaining more than 250 points from its intraday low. The S&P 500 moved up 0.28% to 4,147.60, propelled by shares of SolarEdge and Generac, which climbed 9.05% and 8%, respectively. The Nasdaq Composite jumped 0.92 percent to 12,070.59, aided by Airbnb shares, which surged 13.35 percent after exceeding earnings estimates. Gains in Tesla, Rivian, and Lucid also contributed to the index’s advancement.
Stocks dipped earlier in the day as a report indicated January retail sales rose 3%, when economists polled by Dow Jones projected a 1.9% increase. Even though the Federal Reserve has been raising interest rates to fight inflation, the score shows that the U.S. economy is still doing well.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said in a report released on Wednesday that “as long as consumers continue to spend due to the labour market’s resiliency, inflation is expected to remain sticky.” “The Fed will need to raise interest rates and maintain them at a higher level for a longer period of time than people presently anticipate, which will generate major market volatility as stock and bond markets are priced for a more favourable situation than the one we are headed towards.”
Wednesday’s retail sales numbers are issued one day after the most recent U.S. inflation report. The January report on the consumer price index was a little higher than what economists had expected. This could mean that the Fed will have to work harder to keep prices from going up.
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Later in the week, traders will listen to Fed members’ comments for hints about what the central bank may do at its March meeting.
Additionally, investors will continue to monitor earnings reports. Zillow, Shopify, and DoorDash are some of the companies planning to report this week.
About three-quarters of S&P 500 businesses have released their most recent financial results. 69% of these firms have exceeded profit projections. This percentage is lower than the three-year average of 79%.