Stocks continued their upward climb last week as excitement around big tech continued; positive economic reports stoked investors’ belief that the Federal Reserve has pulled off a soft landing.
Stocks Power Ahead
Big tech was back last week, pushing the Dow and the S&P 500 to new highs early in the week as markets resumed the late Q4 rally.
The so-called “Magnificent Seven” stocks—comprising 28% of the S&P 500 Index—resumed their pole position at the head of the pack as investors maintained their artificial intelligence (AI)-related bullishness and rewarded widespread cost-cutting at many tech giants. While the rally fizzled on Friday, the week’s gains were slow but steady.1,2,3
The big economic news last week was better-than-expected economic growth and inflation news. Real Gross Domestic Product grew at a 3.3% annualized clip in Q4 2023, ahead of Wall Street consensus expectations of 2%.
The Personal Consumption Expenditures (PCE) Index, one of the Fed’s most favored inflation gauges, showed core inflation (excluding food and energy) cooled in December, with an annualized rate of 2.9%, beating consensus expectations. Core inflation was 3.2% on an annualized basis—its lowest level since March 2021. While the inflation update didn’t move markets much, it helped validate investors’ optimism that Fed policy has maintained economic growth while bringing inflation down.4
Footnotes and Sources
- The Wall Street Journal, January 22, 2024
- CNBC.com, January 22, 2024
- The Wall Street Journal, January 25, 2024
- CNBC.com, January 25, 2024
- Slickcharts.com, January 26, 2024
- CNBC.com, January 26, 2024
