Stock Today : The Dow holds on to victory as inflation falls, and Tesla leads growth stocks higher.
The Dow eked to a win on Friday, driven by Tesla, as more signs of lowering inflation confirmed expectations for a widely anticipated Federal Reserve rate cut next week.
The Dow Jones Industrial Average increased by 0.1%, or 28 points, the S&P 500 increased by 0.3%, and the Nasdaq Composite increased by 1%.
Personal consumption expenditures, or the PCE price index, grew 0.1% in December, weaker than expected at 0.2%.
Core PCE inflation, which excludes food and energy and is the Fed’s preferred metric, gained 0.3%, as expected, but slowed to 4.4% for the year through December from 4.7% earlier.
“[T]he slowing in core inflation at this stage is mostly attributable to improved supply chains, rather than the impact of Fed tightening; this will work through later,” Pantheon Macroeconomics wrote in a note.
According to Investing.com’s Fed Rate Monitor Tool, expectations that the Fed will raise rates by 25 basis points next week are now fully priced in.
Treasury yields, on the other hand, have remained above water amid anticipation that Jerome Powell will continue to hype the likelihood of higher rates for longer in the news conference that follows the monetary policy decision.
However, because inflation remains “stubbornly elevated,” the Committee is expected to reiterate the need for additional policy action, according to Stifel in a note.
Consumer discretionary was among the top gainers, fueled by a more than 10% rise in Tesla (NASDAQ:TSLA) after the EV company reported better-than-expected quarterly results earlier this week.
Meanwhile, Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), and Amazon (NASDAQ:AMZN) led the way up, followed by Apple Inc (NASDAQ:AAPL) as investors await additional quarterly results from big companies next week.
Chip stocks struggled to join the rally, knocked down by a 6% decline in Intel Corporation (NASDAQ:INTC) after the chipmaker posted weaker-than-expected quarterly results, with guidance predicting a drop of more than a fifth in quarterly revenue in the first quarter.
Some have worried that Intel’s rough ride just as the firm ramps up expenditure threatens its dividend.
“[W]e believe a V-shaped rebound in 2H will be required to avoid ongoing capital burn,” Credit Suisse said in a report, lowering its price target on the company to $25. “Unfortunately, this opens the door to a dividend cut,” it added.
In other earnings news, American Express Company (NYSE:AXP) disclosed quarterly results and outlook that above Wall Street expectations, sending the stock up 10%. In addition, the credit card firm increased its payout by 15%.
Energy stocks sank more than 1%, driven down by declining oil prices, and Chevron (NYSE:CVX) plunged 4% after the oil major posted quarterly earnings that fell short of estimates due to growing costs and writedowns.
In other news, Adani Enterprises Ltd (NS:ADEL) lost more than $50 billion this week after short-seller Hindenburg Research disclosed a short position in the stock, accusing the Indian corporation of market manipulation and accounting fraud.