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Stock Market News for Jan 27, 2023

U.S. stocks closed higher on Thursday in a choppy trading session that saw investors weigh in an onslaught of economic data, as the fourth-quarter gross domestic product came in higher than expectations, and digested mixed corporate earnings. All three major indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) climbed 0.6% or 205.57 points to end at 33,949.41 points.

The S&P 500 rose 1.1% or 44.21 points to close at 4,060.43 points. Energy and consumer discretionary stocks were the biggest gainers.

The Energy Select Sector SPDR (XLE) gained 3.2%, while the Consumer Discretionary Select Sector SPDR (XLY) added 2.1%. Ten of the 11 sectors of the benchmark index ended in positive territory.

The tech-heavy Nasdaq advanced 1.8% or 199.06 points to finish at 11,512.41 points.

The fear-gauge CBOE Volatility Index (VIX) was down 1.83% to 18.73. Advancers outnumbered decliners on the NYSE by a 2.35-to-1 ratio. On Nasdaq, a 1.45-to-1 ratio favored advancing issues. A total of 11.34 billion shares were traded on Thursday, higher than the last 20-session average of 10.93 billion.

GDP Data Boosts Investors’ Sentiment

Wall Street opened lower on Thursday but reversed soon following an onslaught of economic data that included the advance estimate report on the fourth-quarter gross domestic product, which came in higher than the consensus estimate. The U.S. economy grew 2.9% at an annualized pace in the fourth quarter, higher than economists’ expectations of a rise of 2.8%, according to the Bureau of Economic Analysis.

Although the GDP growth in the fourth quarter slowed slightly, the economy has now expanded more than the normal rate for the second consecutive quarter. U.S. GDP grew 3.2% in the third quarter, following two straight quarters of declines.

The impressive data gave the much-required boost to investors’ confidence and raised hopes of a softer landing in 2023 instead of the economy slipping into recession.

Investors are also hopeful about the Fed going slow on its pace of interest rate hikes on signs that inflation is easing as they wait for the central bank’s policy meeting scheduled in February. The impressive GDP reading helped sent stocks on a rally with the S&P ending at the highest level since December.

Earnings Season Gains Pace

It has been a mixed earnings season so far and investors have been closely watching quarterly reports from big companies to gauge the economy’s health. On Thursday, investors digested another batch of mixed earnings reports.

Corporate earnings released after the closing bell on Wednesday and before the bell on Thursday helped boost investors’ confidence after Microsoft Corporation MSFT issued lackluster guidance earlier this week.

On Thursday, shares of Tesla, Inc. TSLA rallied 11% after the company posted solid quarterly earnings. Tesla posted fourth-quarter 2022 earnings of $1.19 a share, surpassing the Zacks Consensus Estimate of $1.09 per share.

However, shares of Mastercard Incorporated MA declined 1.4% despite beating earnings. Mastercard reported fourth-quarter 2022 adjusted earnings of $2.65 per share, which outpaced the Zacks Consensus Estimate and our estimate of $2.56 per share. Mastercard has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Airline companies also started reporting their quarterly reports on Thursday. Shares of Southwest Airlines Co. LUV fell 3.2% after the company reported a quarterly loss of $0.38 per share, wider than the Zacks Consensus Estimate of a loss of $0.03 per share.

Economic Data

In other major economic data released on Thursday, the Labor Department reported that jobless claims totaled 186,000 for the week ending Jan 21, decreasing 6,000 from the previous week’s revised level of 192,000. The four-week moving average was 206,000, an increase of 750 from the previous week’s revised average of 206,750.

Continuing claims came in at 1,675,000, an increase of 20,000 from the previous week’s revised level of 1,655,000. The 4-week moving average was 1,664,250 a decrease of 10,750 from the previous week's revised average of 1,675,000.

The Commerce Department reported that U.S. new home sales grew for the third-straight month in December, rising 2.3% to a seasonally-adjusted annual rate of 616,000 from 602,000 in the month earlier.

The U.S. Census Bureau said on Thursday that durable goods orders jumped $15.3 billion or 5.6% to $286.9 billion in December, increasing in four of the past five months.

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