Wall Street crept higher on Friday after data showing easing inflation spurred hopes of a policy downshift from the Federal Reserve, while credit card giant American Express jumped nearly 10% on an upbeat forecast.
The Commerce Department’s personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge, showed a 0.1% rise last month after a similar increase in November.
U.S. consumer spending also fell in December, putting the economy on a lower growth path heading into 2023.
As inflation as well as the economy slows, traders have stuck with bets that the central bank will raise rates just once more beyond next week’s widely expected quarter-point hike before stopping.
Markets expect the terminal rate to rise to 4.9% in June, still below many policymakers’ expectations of beyond 5%.
“That in-line data is certainly going to be sufficient to justify the Fed slowing down to a 25-basis-point rate hike when they make their decision on February 1,” said Art Hogan, chief market strategist at B Riley Wealth.
“We had expectations for better data and this better news is likely priced in, so then you can shift your focus to things like earnings and while (they are) a mixed bag, we are still getting more good news than bad news.”
About a quarter of the S&P 500 companies have reported earnings so far, of which 69% have beaten analysts’ estimates, according to Refinitiv data as of Thursday.
Wall Street is set to end the week higher, aided by renewed appetite for growth stocks and Tesla’s bullish outlook, though market sentiment has been dented by a cautious tone from companies that have flagged a tough macro environment.
American Express Co (AXP.N) jumped 9.8% on raising its earnings forecast for 2023 above Wall Street expectations, while credit card rival Visa Inc (V.N) added 3.4% on upbeat quarterly results.
Both companies were among the biggest boosts to the S&P 500 (.SPX) and the Dow Jones Industrial Average (.DJI).
Capping gains, Intel (INTC.O) tumbled 7.94% after the company reported its worst revenue slump in at least two decades and warned of additional losses amid weak demand for personal computers.
The Philadephia SE Semiconductor index (.SOX) slid 0.6.
Chevron Corp (CVX.N), the second largest U.S. oil producer, fell 2.5% as quarterly earnings missed analysts’ estimates due to asset writedowns and a retreat in oil and gas prices.
Seven of the 11 major S&P 500 sectors edged higher with the consumer discretionary sector (.SPLRCD) surging 1.4%.
At 10:04 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 90.11 points, or 0.27%, at 34,039.52, the S&P 500 (.SPX) was up 8.15 points, or 0.20%, at 4,068.58, and the Nasdaq Composite (.IXIC) was up 42.29 points, or 0.37%, at 11,554.70.
Advancing issues outnumbered decliners by a 1.32-to-1 ratio on the NYSE and by a 1.37-to-1 ratio on the Nasdaq.
The S&P index recorded 12 new 52-week highs and no new low, while the Nasdaq recorded 43 new highs and 21 new lows.