Stocks advanced on Tuesday as investors continued to build on an early New Year rally while they await upcoming economic data and corporate earnings later in the week.
The Dow Jones Industrial Average rose 121 points, or 0.4%. The S&P 500 rose 0.5%, while the Nasdaq Composite added 0.7%.
The S&P 500 was up 1.1% in the first five trading days of 2023 until Monday, which some say is a good omen for the rest of the year. The Nasdaq has risen in recent days as optimism about slowing inflation has led investors to rout technology stocks.
Billionaire investor Paul Tudor Jones was bullish on the stock market Tuesday morning, saying the Fed likely won’t break the economy, and hold off on raising interest rates before they do. Jones, who noted that he does not provide a specific forecast, said there is significant demand for stocks down the road this year due to buybacks and mergers.
“You probably have excess demand for just under $1 trillion in US stocks,” Jones said Tuesday on CNBC. “Squawk Box”. “Where will the sale come from to offset those demands coming from buybacks, from items of the company’s line, from a mix of buybacks and mergers and acquisitions? 7% or 8% this year.”
Investors came into the new year worried that higher federal interest rates could tip the economy into recession. However, many seem to be betting that inflation is starting to ease. They will watch the upcoming CPI data on Thursday and the earnings of major banks on Friday for any clues about the health of the economy or clues about how the Fed will move interest rates in the future.
“We’re likely to be in this really tight range and most likely directionless until at least Thursday we finish the CPI report and then the start of earnings season, which will also be later this week,” said Megan Hornemann, chief investment officer. Officer at Verdence Capital Advisors. “Right now, I think the market is caught in the middle of waiting for economic data and absorbing some of the Fed’s rhetoric.”
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