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15/01/24 Briefing

The S&P 500 and the Nasdaq ticked higher on Friday, while the Dow ended in negative zone amid mixed fourth-quarter earnings results. Market participants gauged key inflation data and expected the Federal Reserve’s rate cuts in March.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) declined 0.3% or 118.04 points to close at 37,592.98. Notably, 15 components of the 30-stock index ended in positive territory, while 15 ended in negative zone.The tech-heavy Nasdaq Composite finished at 14,972.76, rising 0.02% due to the strong performance of large-cap technology stocks. The major gainer of the Nasdaq Composite was MercadoLibre, Inc. MELI, after jumping 4.2%. MercadoLibre currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The S&P 500 gained 0.1% to finish at 4,783.83. Out of 11 broad sectors of the benchmark, seven ended in positive territory, while four finished in red. The Energy Select Sector SPDR (XLE), the Real Estate Select Sector SPDR (XLRE) and the Utilities Select Sector SPDR (XLU) rose 1.1%, 0.8% and 0.6%, respectively, while the Consumer Discretionary Select Sector SPDR (XLY) declined 1.2%.The fear-gauge CBOE Volatility Index (VIX) increased 2.1% to 12.70. A total of 10.57 billion shares were traded on Friday, lower than the last 20-session average of 12.06 billion. The S&P 500 posted 37 new 52-week highs and no new lows; the Nasdaq Composite recorded 134 new highs and 86 new lows.

Investors Gauge Inflation Data

According to the report from the U.S. Labor Department, there was a slight decrease of 0.1% in the producer price index (PPI) in December. Despite this decline, the PPI ended 2023 with a 1% rise compared to a surge of 6.4% in 2022.When excluding food and energy prices, the core PPI remained unchanged from the November experiencing a projected 0.2% increase. In 2023, final demand (excluding food, energy and trade services) increased by 2.5%, which indicates a slowdown from 4.7% growth in 2022.

Analyzing details from the PPI release reveals that there was a decrease of 0.4% in prices for demand goods in December the consecutive month of declines, in this category. Diesel fuel prices experienced a drop of 12.4%, while gasoline prices saw an increase of 2.1%. On the services front, prices remained stable for the month. However, there was an increase of 3.3% in advice-related fields. On the other hand, margins for machinery and vehicle wholesaling experienced a decline of 5.5%.

The overall market sentiment suggests that due to signs of decreasing inflation, the Federal Reserve might consider implementing interest rate cuts in March. According to the CME Groups FedWatch tracker, expectations are now pointing toward five rate cuts, which could potentially bring down the benchmark fed funds rate to a target range of 3.75% to 4%.

Mixed Q4 Earnings Results

Citigroup Inc. C reported fourth-quarter fiscal 2023 adjusted earnings of $0.84 per share, which surpassed the Zacks Consensus Estimate of $0.73 per share. The bank retailer generated total revenues of $17.44 billion, which lagged the Zacks Consensus Estimate of $18.66 billion. The stock price of Citigroup rose 1%.

Bank of America Corporation BAC reported fourth-quarter fiscal 2023 adjusted earnings per share of $0.70, which surpassed the Zacks Consensus Estimate of $0.6 per share. Total revenues of $21.96 billion missed the Zacks Consensus Estimate of $24.07 billion. The stock price of Bank of America Corporation fell 1.1%.

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