A trader works on the trading floor at the New York Stock Exchange (NYSE), January 5, 2023.
Andrew Kelly | Reuters
Stocks rallied for a second straight session Monday, as traders tried to claw back some of the ground lost in 2022.
The Nasdaq Composite had the biggest advance of 1.4%, pushed up by an 8% rally in Tesla stock, The S&P 500 followed with a 0.6% gain. The Dow Jones Industrial Average lagged, adding 31 points, or 0.1%, as defensive drug stocks like Merck and Johnson & Johnson weighed on the index.
That follows a winning shortened week for the three major indexes, with the Dow and S&P 500 posting their best weeks since November. A chunk of those gains came Friday, with the Dow rallying 700 points, while the S&P 500 and Nasdaq advanced 2.3% and 2.6%, respectively.
Friday’s gains were spurred by the latest batch of economic data. Nonfarm payrolls came in slightly higher than expectations, but wages increased at a slower pace than expected. That, and data showing a contraction in the services sector, heightened hopes that the central bank’s rate hikes are accomplishing the intended goal of cooling the economy.
That data helped investors shake off pessimism earlier in the week following the release of the December Fed meeting minutes, in which officials said interest rates would need to be elevated for “some time.”
“Even the Fed is starting to signal to markets that the work is nearly complete,” said Jamie Cox, managing partner of Harris Financial Group. “That’s also contributing to positives in markets.”
Monday marks the fifth trading day of 2023, reminding investors of a classic Wall Street rule that suggests the market will end the year up if stocks perform well in the first five sessions. The S&P 500 has ended the year positive 83% of the times it ended the first five trading sessions up — and with an average gain of 14%, according to the Stock Trader’s Almanac.
Investors will watch for consumer credit data coming later in the day. They are also anticipating December’s consumer price index report coming Thursday and big bank earnings scheduled for Friday.
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