Major stock market indexes picked up steam in the last hour of trading Tuesday, closing at the highs of the day and finishing January strong. Earnings drove price action ahead of Wednesday's Fed meeting.
The Dow Jones Industrial Average rose 1.1% and the S&P 500 gained 1.5%. The Nasdaq rallied 1.7% while the small-cap Russell 2000 outperformed the major indexes, rising 2.4%.
NYSE volume was slightly lower and Nasdaq higher vs. the same time on Monday.
The Dow gained 2.6% in January while the S&P 500 added 6%. The Nasdaq composite lifted into leadership to start the year, rising 10.5% this month. The small-cap Russell 2000 came in second, up 9.8%.
This was the Nasdaq's strongest January gain since 2001, when it rose 12.2%. Historically, when the index is up over 10% in January, it books an average 14.1% gain for the year, underpinning the phrase "as January goes, so does the year."
The Dow and S&P 500 posted their biggest January gains since 2019.
The Dow held above its 50-day and 21-day exponential moving averages, while the S&P 500 traded above its 200-day moving average. The Nasdaq reclaimed its 200-day line.
The tech-heavy Nasdaq 100-tracking Invesco QQQ Trust ETF reclaimed 1.5%.
Crude oil edged up 1.6% to $79.10 per barrel. The Energy Select Sector SPDR ETF added 0.9%.
Bitcoin futures rose 1.7% to $23,220. The Innovator IBD 50 ETF fared better than the major stock market indexes, gaining 2.1% but below the 50-day line.
European stock markets were mixed, with the German DAX and Paris CAC relatively unchanged. The London FTSE trimmed 0.2% to close out the trading day.
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Economic News, Fed Decision On Tap
The 10-year Treasury note yield shed 1 basis point to 3.53%.
The Q4 employment cost index rose 1%, slightly below the 1.1% consensus. The index measures total employee compensation including wages and benefits. The index has posted 1% or higher for the last five quarters, out wage pressure on employers.
The consumer confidence Index dropped to 107.1 in January from a revised 109.0 in December, as consumers are worried about a recession.
The Federal Reserve is expected to announce a quarter-point rate hike on Wednesday. That would mark a drop from December's half-point increase, plus four 75-basis-point hikes in 2022. Some economists expect a higher-for-longer funds rate.
January ISM manufacturing and services numbers and the Job Openings and Labor Turnover Survey (JOLTS) reports precede Wednesday's rate decision. Friday brings the all-important January nonfarm payrolls report.
General Motors Gets A Lift After Earnings
Music streamer Spotify soared 12.7% after reporting a larger-than-expected Q4 loss but higher-than-expected user growth. The Luxembourg-based company announced this month it will cut about 6% of its workforce to reduce expenses.
General Motors jumped 8.4% after beating Q4 earnings and sales views and offering higher-than-expected full-year adjusted EPS guidance. The automaker announced it will invest $650 million in Lithium Americas in its Lithium Pass project, which is estimated to provide lithium to 1 million electric vehicles per year.
Lithium Americas rose 14.7% on the news.
Exxon Mobil rose 2.2% after reporting better-than-expected Q4 earnings per share and sales. The oil and natural gas producer announced record annual profit of $55.7 billion for 2022 in its Tuesday earnings release.
The IBD 50 stock is in the 5% buy zone of a flat base, with a 114.76 buy point, reaching to 120.50.
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Dow component Caterpillar gapped down 3.5% after reporting a miss on Q4 EPS and a beat on sales. CAT is the Dow's biggest loser today.
Homebuilder PulteGroup gapped up 9.4% in heavy volume following Q4 EPS and sales beats. New orders fell 41% due to higher interest rates. Revenue got a tail wind from 17% higher average home prices.
Shares are extended from the 5% buy zone of a long base with a 52.38 buy point.
Dow component McDonald's sank 1.3% despite reporting a beat on Q4 top and bottom lines. Annual EPS is expected to decline 25% in 2023 and 7% in 2024. The move sent the fast food stock below its 50-day moving average, though it continues to work on a base.
Oil and gas refiner Phillips 66 gapped down 5.8% after reporting a miss on adjusted Q4 EPS and a beat on sales. The move sent the IBD 50 stock below its 50-day line, sending a warning to investors. The stock was the S&P 500's biggest loser today.
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Stock Market Movers: Homebuilder Breaks Out
Green Brick Partners rose 5.4% in light volume and hit the 30.90 buy point of a long base, and is in the buy zone reaching to 32.45. The relative strength line hit a new high, as indicated by the blue dot on the MarketSmith chart. The homebuilder and land developer is ranked first out of 22 stocks in the homebuilding industry group. The group is ranked a high No. 21 on IBD's list of 197 industries.
IBD 50 stock Vertex was up 1% and briefly hit the 324.85 buy point of a cup base, but pulled away. Volume was light.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
