Stocks experienced a positive opening and maintained their gains throughout the trading session, even amidst some late selling pressure. This upward movement was fueled by a combination of strong earnings reports and economic data that continues to align with Federal Reserve Chair Jerome Powell’s cautious stance on interest rates. The Nasdaq Composite outperformed the other major indexes, recording the largest increase.
Minutes from the January Federal Open Market Committee (FOMC) meeting revealed a division among policymakers regarding the decision to maintain the federal funds rate. There are differing opinions on the future trajectory of inflation, especially with Kevin Warsh set to succeed Powell in May.
The Census Bureau reported a 6.2% increase in housing starts, reaching a five-month high in December. Additionally, building permits surpassed Wall Street expectations. While durable goods orders fell in December, the decline was less severe than anticipated. Industrial production saw a monthly increase of 0.7% in January, indicating a resurgence in manufacturing activity.
Wells Fargo economists noted signs of a broader economic upturn, suggesting that while the AI investment boom continues, traditional capital expenditures are stabilizing, along with improvements in non-high-tech output. Economic observers are keenly awaiting the upcoming release of the Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred measure of inflation, scheduled for Friday.
Company fundamentals also appear robust, particularly in key sectors. FactSet analyst John Butters pointed out that the blended revenue growth rate for the S&P 500 in the fourth quarter stands at 9.0%, potentially the highest since Q3 of 2022. Most sectors, including technology, communication services, and healthcare, reported year-over-year revenue growth.
Caesars Entertainment’s stock surged by 13.0% following strong fourth-quarter revenue results that exceeded Wall Street expectations. CEO Tom Reeg emphasized stability in the corporate structure despite challenges during off-peak periods in Las Vegas. Although Caesars reported adjusted EBITDA of $901 million—slightly shy of the expected $902.5 million—overall revenue of $2.92 billion surpassed forecasts of $2.8 billion. An analyst recently upgraded the company’s rating, suggesting potential for significant stock upside driven by regional trends and favorable consumer conditions.
Meanwhile, Apple Inc. has shown resilience despite facing challenges within the tech sector. With plans for multiple events throughout the year, one notable focus will be on integrating AI functionalities into its products. Observers believe that Apple’s strategy in the AI domain may significantly impact consumer market shares, with projections suggesting that its forthcoming offerings could dominate the landscape. Currently, Apple is slightly below year-to-date performance but has generally outperformed the broader tech sector.
The Cboe Volatility Index (VIX), often referred to as the market’s fear gauge, retreated slightly, indicating a return to its normal range. By the close of the market, the Nasdaq Composite rose by 0.8%, the S&P 500 gained 0.6%, and the Dow Jones Industrial Average was up 0.3%.
