At the New York Stock exchange (NYSE) on January 31, 2024, traders are busy during morning trading before the US Federal Reserve’s decision on lending rates. Angela Weiss | Afp | Getty ImagesStocks surged on Friday after the government announced that December’s inflation reading was even lower than initially reported. The S&P 500 broke past the 5,000 level, briefly touching this historic milestone on Thursday. The Dow Jones Industrial Average saw a marginal decrease of 7 points, while the S&P 500 gained 0.1%. Meanwhile, the Nasdaq Composite rose by 0.3%. For the week, the S&P increased by 0.9%, while the Dow and the Nasdaq Composite rose by 0.2% and 1.4% respectively. All the major averages are set for a fifth straight week of gains.Stock Chart IconStock chart icon
S&P 500The hopes of a strong economy sustaining growth have driven the recent market upsurge, with the S&P opening above the 5,000 level for the first time ever after briefly touching 5,000.40 during Thursday’s session. The S&P 500 first surpassed 4,000 in April 2021.”Although there may not be an apparent difference between 5,000 and 4,999, these significant round numbers do hold psychological importance for investors,” noted Ryan Detrick, chief market strategist at Carson Group. “Throughout history, those who remain steadfast during difficult times are usually rewarded in the end, and this time is no different.”A downward revision in December’s consumer price index also contributed to positive sentiment on Friday. The government revised the figure to show just a 0.2% increase, down from the initially reported 0.3% increase. Core inflation figures, excluding food and energy, remained unaltered. Treasury yields declined following the release of the revised figures. January’s CPI figures are scheduled for release next week.Megacap technology stocks continued to advance, aiding the S&P 500’s climb above 5,000. Nvidia and Alphabet each saw gains of about 1%. Cloudflare surged by 18% on strong earnings, bolstering the broader cloud sector. A strong earnings season, along with easing inflation data and a resilient economy, has powered the market rally into 2024, with the S&P up by nearly 5% year to date. This has also contributed to what appears to be another week of gains for stocks.Earnings reports from the latter part of the season continued, with PepsiCo dropping by 2% on mixed results. Take-Two Interactive slumped by 8% following a disappointing outlook, while Pinterest fell by 9% after issuing a weaker-than-expected forecast and missing revenue estimates. A total of 319 S&P companies have reported quarterly earnings, and 80.6% of them have surpassed analyst expectations, according to LSEG. This stands in contrast to a typical quarter since 1994, which has seen a 67% beat rate.
