Market Update 01/30/23

Chris Koruth John

Markets continued to rally from Jan. 23 to Jan. 30 as major companies reported fourth quarter earnings and waited for the Federal Reserve to release key economic data.

Monday started with a rise in the market, heavily supplemented by earnings posted by technology giants like Netflix Inc. The media company saw surprising subscriber growth rates that outperformed street consensus for its fourth quarter. This data paired with positive indicators of a dovish Fed announcement following the central bank’s Feb. 1 meeting bolstered market sentiment.

By Monday’s close, the Dow Jones Industrial Average rose 0.8%,  the S&P 500 rose 1.2% and the Nasdaq composite rose 2%. Investors remained optimistic concerning other Big Tech earnings from major players like Microsoft Corp., regardless of possible downside factors like layoffs.

Increasingly positive sentiment surrounding the Fed’s rate hike decision significantly moved the market this week. Consensus on the street heavily leans toward the likelihood of a 25-basis-point hike, which would complement December’s decrease. 

“I expect that we will raise rates a few more times this year, though, to my mind, the days of us raising them 75 basis points at a time have surely passed,” Philadelphia Fed President Patrick Harker told CNBC.

On Tuesday, the market stood heavily mixed with companies across various sectors reporting earnings of varying caliber. Share prices for Johnson & Johnson decreased after the company fell short on earnings per share, while prices for 3M Co. dropped after missing revenue expectations. The Dow rose 0.3%, S&P 500 fell 0.1% and the Nasdaq slid 0.3%.

On Thursday, the Fed announced key economic developments surrounding growth in gross domestic product for the final quarter of 2022. GDP can serve as an indicator for how rapidly a country’s economy is growing.

The economy grew 2.9% year over year, which beat analysts’ expectations of a 2.8% growth rate. The results were delighting as it shed light on the possibility of a successfully engineered soft landing.

Friday closed with the Dow rising 0.1%, the S&P 500 rising 0.2% and the Nasdaq trading rising 0.9%. Slight increases resulted from data from the personal consumption expenditure price index. In line with consensus estimates, the index rose 0.1%.

The indexes ended the week with gains. The Dow added 1.8%, while the S&P 500 added 2.5%. The Nasdaq rose 4.3%, marking a fourth straight week of gains.

In a reverse from the previous week’s increases, stocks fell on the following Monday, as investors remain wary ahead of the Fed’s meeting and more corporations’ earnings reports. The Dow declined 0.8%, the S&P 500 dropped 1.3% and the Nasdaq lost 2%.

Investors will be weary of trying to time the market upon the Fed’s rate hike since a lot of the expected market movement is priced in. They should keep an eye on interviews with  members voting at the Fed meeting, as these will serve as early indications of the Fed’s economic stance, be it dovish or hawkish.