The S&P 500 and Nasdaq indexes edged higher in choppy trading on Thursday, lifted by Tesla and a clutch of economic data that eased some worries about a deep recession ahead of a key inflation reading.
Investors have focused on earnings and forecasts from corporate America to gauge the impact of the Federal Reserve’s aggressive monetary tightening to tame inflation.
Tesla Inc’s (TSLA.O) shares jumped 7.91% after better-than-expected quarterly results and bullish commentary on demand reassured investors that the EV maker could cope with a slowing economy in 2023. The stock was the biggest boost to the S&P 500 consumer discretionary sector index (.SPLRCD).
Battered growth stocks have bounced back in January amid expectations that the Fed may slow the pace of rate hikes, with the S&P 500 Growth index (.IGX) recouping more than half of the losses logged last month.
“This is a market that is waiting to hear more of what corporate America has to say,” Quincy Krosby, chief global strategist at LPL Financial said.
“They (investors) are trying to determine expectations of a recession and how deep the recession could be, and are trying to extrapolate that from corporate guidance.”
A report from the Labor Department showed initial claims for state unemployment benefits dropped for the week ended Jan. 21, while the Commerce Department said gross domestic product (GDP) expanded at an annualized rate of 2.9% in the fourth quarter, above expectations of a 2.6% rise.
The GDP report could mark the last quarter of solid growth before the Fed’s tough measures to fight inflation starts reflecting, with most economists expecting a mild recession by the second half of 2023.
Money markets are pricing in a 25-basis-points rate hike by the Fed next week, with a terminal rate of 4.9% in June, still below the 5% rate backed by many policymakers.
Focus will now be on the personal consumption expenditure (PCE) data, the Fed’s preferred inflation metric, scheduled for release on Friday.
At 12:09 p.m. ET, the S&P 500 (.SPX) was up 19.55 points, or 0.49%, at 4,035.77, and the Nasdaq Composite (.IXIC) was up 99.57 points, or 0.88%, at 11,412.92.
The Dow Jones Industrial Average (.DJI) was up 59.48 points, or 0.18%, at 33,803.32, still lagging its peers as IBM Corp (IBM.N) slid 4.65% after it missed annual cash flow targets.
So far, 126 companies in the S&P 500 have reported fourth-quarter earnings, with 69% topping consensus estimates. That compares with the average of the past four quarters of 76%, according to Refinitiv. Analysts now see aggregate S&P 500 earnings dropping 2.7% year-on-year for the period .
Mastercard Inc (MA.N) advanced 1.53% after reporting a better-than-expected fourth-quarter profit.
Chevron Corp (CVX.N) gained 4.11% after the oil major said it would triple its budget for share buybacks to $75 billion. The S&P 500 energy sector index (.SPNY) rose 2.2%, also helped by higher crude prices.
Advancing issues outnumbered decliners by a 1.38-to-1 ratio on the NYSE and by a 1.08-to-1 ratio on the Nasdaq.
The S&P index recorded 21 new 52-week highs and no new low, while the Nasdaq recorded 79 new highs and 20 new lows.