S&P 500 nearly flat as investors look to upcoming inflation report, earnings season

Fundstrat's Tom Lee expects a 20% rally this year

Stocks were little changed on Tuesday as investors awaited economic data and corporate earnings later in the week for signs of how the Federal Reserve will move interest rates going forward.

The Dow Jones Industrial Average gained 15 points, equivalent to 0.1%. The S&P 500 was flat, while the Nasdaq Composite added 0.1%.

The S&P 500 is up about 1.1% in the first five trading days of 2023 through Monday, which some say bodes well for the rest of the year. The Nasdaq has rallied in recent days as optimism over cooling inflation pushes investors into battered tech stocks.

Billionaire investor Paul Tudor Jones was bullish on the stock market Tuesday morning, saying the Federal Reserve was unlikely to smash the economy, halting rate hikes before it did. Jones, who said he doesn’t make an accurate forecast, said there’s been huge demand this year for stocks from stock buybacks and mergers.

“You probably have something a little under $1 trillion in excess demand for US equities,” Jones said on CNBC’s “Squawk Box” on Tuesday. “Where is the sale going to offset the demands from buyouts, elements of the business line, a combination of buyouts and mergers and acquisitions? That’s a significant amount. Ceteris paribus, all being the same, the stock market would be up 7% or 8% this year.”

Investors entered the new year fearful that higher Fed rates could tip the economy into a recession. but many seem to be mounting bets that inflation will start to ease in early 2023. Later in the week they will be watching for consumer price index data to come Thursday and big-name earnings. banks Friday.

“We’re probably going to be in this very narrow and very likely directionless range until we finish at least Thursday with the CPI report and then kick off the earnings season, which is also more later this week,” said Chief Investment Officer Megan Horneman. Director at Verdence Capital Advisers. “Right now, I just think the market is kind of caught in the middle of waiting for economic data and absorbing some of the Fed talk.”

Leave a Reply

Your email address will not be published. Required fields are marked *