Stock Market Today: Stocks Close Higher Ahead of CPI
Technology and communication services stocks outperformed in a strong session for the major benchmarks.
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Stocks closed higher Monday ahead of a busy week on Wall Street.
A bare economic calendar allowed traders to turn their attention to tomorrow morning's inflation update, with the Labor Department set to unveil the next CPI report report ahead of the opening bell. And while today's buying was fairly broad-based, several Big Tech stocks enjoyed an outsized lift on reports that Facebook parent Meta Platforms (META) is planning to pass out more pink slips.
"All eyes are laser-focused on Tuesday's CPI report to gauge the market's likely flight course for the balance of Q1 and beyond," says Greg Bassuk, CEO at asset management firm AXS Investments. "Tuesday's CPI report, if fierier than expected, could jolt investors and the equity markets, which have been on a growth tear in 2023, sparked by hopes of declining inflation and a more dovish Fed policy on interest rates. A reverse course from the recent months of disinflation would reignite investor concerns that high inflation and Fed rate hikes will define the markets in 2023 as they did last year."
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As for tomorrow's report, economists surveyed by Dow Jones expect headline inflation to increase 0.4% on a monthly basis, and by 6.2% year-over-year.
In single-stock news, Meta shares jumped 3.0% after the Financial Times said the company has delayed putting together some team budgets because it's planning another round of layoffs next month. This next batch of potential pink slips – which would add to the 11,000 issued in November – are part of CEO Mark Zuckerberg's call to make 2023 Meta's "Year of Efficiency."
The outsized gain in Meta stock helped the broader technology (+1.8%) and communication services (+1.5%) sectors outperform today, as well. As for the broader indexes, the Nasdaq Composite jumped 1.5% to 11,891, the S&P 500 rose 1.2% to 4,137, and the Dow Jones Industrial Average gained 1.1% to 34,245.
The best growth stocks to buy
Today's strong showing by the Nasdaq highlights the rising appetite for riskier stocks that investors have shown so far in 2023. The tech-heavy index is up 13.6% for the year-to-date, compared to a 7.8% gain for the broader S&P 500 and a 3.3% return for the blue-chip Dow.
Part of this is likely due to signs that the economic slowdown many are anticipating might not be as bad as initially expected. Indeed, the January jobs report came in surprisingly strong, while the Q4 GDP reading showed the U.S. economy grew at a faster-than-expected pace in the final quarter of 2022. "A soft landing is quickly replacing the 2023 recession forecast as the base case scenario," says Steven Ricchiuto, U.S. chief economist at Mizuho Securities. "This more constructive macro outlook and the general belief the Fed is searching for any excuse to reverse the direction of monetary policy has helped promote the 'risk on' trade that has dominated since the beginning of the year."
This is certainly good news for investors seeking out the best growth stocks, including the top AI stocks and best tech stocks to buy. And given the sharp declines these stocks succumbed to last year, many can still be bought at bargain valuations.
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