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US stocks rise after December’s revised inflation reading

Stocks rose on Friday after December’s revised inflation reading came in lower than first reported, and the S&P 500 closed above the key 5,000 level as strong earnings and economic news chugged on.

The S&P 500 rose 0.57 per cent to end at 5,026.61, while the Nasdaq Composite rallied 1.25 per cent to close at 15,990.66. The Dow Jones Industrial Average slipped 54.64 points, or 0.14 per cent, to settle at 38,671.69.

For the week, the S&P added 1.4 per cent, while the Nasdaq gained 2.3 per cent. The Dow finished flat. All three major averages notched their fifth straight winning week and 14th positive week in 15.

A solid earnings season, easing inflation data and a resilient economy have charged 2024′s market rally. It’s also propelled the S&P to close above the 5,000 level after first touching the milestone during Thursday’s session. The index first crossed 4,000 in April 2021.

A revision lower in December’s consumer price index also helped sentiment. The government adjusted the figure to a 0.2 per cent increase, down from a 0.3 per cent increase initially reported. Core inflation figures, excluding food and energy, were the same. January’s CPI figures are due out next week.

Megacap technology stocks gained again on Friday, contributing to the S&P’s march above 5,000. Nvidia jumped 3.6 per cent, and Alphabet added more than 2 per cent. Cloudflare skyrocketed 19.5 per cent on strong earnings, boosting the broader cloud sector in tandem. Semiconductor stocks also rose, with the VanEck Semiconductor ETF (SMH) edging up 2.2 per cent.

The back half of the fourth-quarter earnings reporting period pressed on, with PepsiCo falling 3.6 per cent on mixed results. Take-Two Interactive slumped 8.7 per cent on a disappointing outlook, while Pinterest dropped 9.5 per cent after issuing a weaker-than-expected forecast and missing revenue estimates.

Despite these negative prints, earnings have so far proven more robust than expected. A total of 332 S&P companies have reported results, with about 81 per cent of them reporting earnings above analyst expectations, according to LSEG. That compares to a 67 per cent beat rate in a typical quarter since 1994.

Overall, most sectors closed higher overnight. Tech was the best performer, whilst Energy was the worst.

This week’s agenda for local investors includes significant earnings reports from various companies such as Aurizon, CSL, AMP, CBA, Magellan, Telstra, ASX, and QBE. Market analyst Josh Gilbert highlights particular interest in CSL and Telstra, citing CSL’s half-year results as a focal point for assessing its recovery trajectory and Telstra’s profitability growth driven by cost-cutting measures and strategic investments in 5G technology.
 

Currency

One Australian dollar at 7.35am was buying 65.17 US cents.

Commodities

Gold lost 0.45 per cent. Silver fell 0.19 per cent. Copper lost 0.55 per cent. Oil gained 0.81 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 0.30 per cent, Frankfurt lost 0.22 per cent, and Paris closed 0.24 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei added 0.09 per cent, Hong Kong’s Hang Seng lost 0.83 per cent and China’s Shanghai Composite was closed.

On Friday, the Australian share market closed 0.07 per cent higher at 7,644.84.

Ex-dividends
Bailador Technology Investments (ASX:BTI) is paying 3.5 cents fully franked

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

Disclaimer

The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Any prices published are accurate subject to the time of filming and shouldn’t be relied upon to make a financial decision. Commentators may hold positions in stocks mentioned and companies may pay FNN to produce the content at times. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.