Nasdaq Jumps To Four-Month High Despite Steep Drop By Intel

(RTTNews) - After showing a lack of direction earlier in the session, stocks have moved mostly higher over the course of the trading day on Friday. The tech-heavy Nasdaq has helped lead the advance, jumping to its best intraday level in over four months.

Currently, the major averages are just off their highs of the session. The Nasdaq is up 143.23 points or 1.2 percent at 11,655.64, the S&P 500 is up 23.71 points or 0.6 percent at 4,084.14 and the Dow is up 138.45 points or 0.4 percent at 34,087.86.

The strength that has emerged on Wall Street may reflect optimism about slower interest rate hikes ahead of the Federal Reserve's monetary policy meeting next week.

While the Fed is widely expected to slow the pace of interest rate hikes to 25 basis points, traders will pay close attention to the accompanying statement for clues about the outlook for further rate hikes.

Recent upbeat economic data has generated some optimism the Fed could engineer a soft landing but has also led to concerns the central bank will need to keep rates at elevated levels for longer than anticipated.

"Stocks have gone from oversold to elevated levels as recession risks fade and investors doubt the Fed will follow through with their dot plot forecast," said Edward Moya, senior market analyst at OANDA.

On the U.S. economic front, the Commerce Department released a report showing personal income increased in line with economist estimates in the month of December.

The report said personal income inched up by 0.2 percent in December after rising by a downwardly revised 0.3 percent in November.

Economists had expected personal spending to edge up by 0.2 percent compared to the 0.4 percent increase originally reported for the previous month.

Meanwhile, the Commerce Department said personal spending dipped by 0.2 percent in December after slipping by 0.1 percent in November. The modest decrease matched economist estimates.

The report also said core consumer prices, which exclude food and energy prices, rose by 0.3 percent in December after inching up by 0.2 percent in November.

The inflation reading, which is said to be preferred by the Fed, was expected to show another 0.2 percent uptick.

The Commerce Department said the annual rate of growth in core consumer prices slowed to 4.4 percent in December from 4.7 percent in November.

"With higher interest rates evidently weighing heavily on demand now, we expect core inflation to continue moderating this year, which will eventually persuade the Fed to begin cutting interest rates late this year," said Paul Ashworth, Chief North America Economist at Capital Economics.

A separate report from the National Association of Realtors showed an unexpected rebound in pending home sales in December, while the University of Michigan upwardly revised its reading on consumer sentiment in January.

The surge by the tech-heavy Nasdaq comes despite a sharp decline by shares of Intel (INTC), with the semiconductor giant plunging by 6.7 percent.

The steep drop by Intel comes after the company reported weaker than expected fourth quarter results and forecast a loss for the current quarter.

Energy giant Chevron (CVX) is also giving back ground after yesterday's surge after reporting fourth quarter earnings that missed analyst estimates.

Meanwhile, shares of American Express (AXP) have soared by 11.3 percent after the credit card giant reported weaker than expected fourth quarter results but provided upbeat guidance for 2023 and increased its dividend.

Sector News

Retail stocks have shown a strong move to the upside on the day, driving the Dow Jones U.S. Retail Index up by 1.4 percent to its best intraday level in three months.

Significant strength has also emerged among transportation stocks, as reflected by the1.4 percent gain being posted by the Dow Jones Transportation Average.

Interest rate-sensitive commercial real estate stocks are also seeing considerable strength, with the Dow Jones U.S. Real Estate Index climbing by 1.2 percent.

On the other hand, oil stocks remain under pressure, with the NYSE Arca Oil Index falling by 1.5 percent amid a steep drop by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index rose by 0.5 percent.

The major European markets also showed modest moves to the upside on the day. While the French CAC 40 Index closed just above the unchanged line, the U.K.'s FTSE 100 Index and the German DAX Index both inch up by 0.1 percent.

In the bond market, treasuries have moved lower as traders looked ahead to next week's Fed meeting. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.7 basis points at 3.520 percent.