Stocks are on track for another day of gains in the last hour
With one hour of trading remaining, all three major indexes are keeping pace with daily gains.
The Dow is up 0.7%. The Nasdaq Composite and the S&P 500 trailed, gaining 0.6% and 0.5%, respectively.
If the Nasdaq closes, it would be the first five-day rally for the tech index since July.
—Alex Harring
Carvana jumps 35% amid short squeeze
Home mortgage rates are falling, according to Freddie Mac
The cost of financing a home purchase fell further this week.
The average interest rate on a 30-year fixed-rate mortgage fell to 6.33%, down from the previous week’s average rate of 6.48%, according to data from Freddie Mac. Meanwhile, 15-year mortgage rates averaged 5.52%, down from last week’s average of 5.73%.
While rates on these loans are falling, they remain high compared to 12 months ago, before the Federal Reserve began its rate hike campaign in earnest. A year ago, the average rate for a 30-year mortgage was 3.45%, and the average for 15-year loans was 2.62%.
— Give it Market
Market breadth strong as stocks rally
Advancers had a clear advantage over decliners on Thursday as the main benchmark US stocks rallied after the latest inflation data report.
More than 2,100 names listed on the New York Stock Exchange traded higher, while only 786 declined, according to FactSet. In other words, advancers led decliners roughly 3-1.
– Fred Imbert
Eight of the 11 S&P 500 sectors are advancing
Eight of the 11 S&P 500 sectors traded higher on Thursday.
Energy led the way with 2.1%. Real estate and communication services are the second and third best performers, with an increase of 0.9% each.
On the other hand, consumer staples were heading for the worst daily performance, with a 0.6% drop. Health care and utilities were the other two in the red, each losing 0.2%.
—Alex Harring
Stocks making the biggest moves at midday
Here are the stocks making the biggest moves of the day:
Check out our full list for more details and more great engines.
– Tanaya Machel
Indices gain ground as investors enter the second half of the trading day
After an upbeat morning, stocks rallied.
The Dow rose 290 points, or 0.8%. At its peak, the 30-share index advanced 0.9%. It fell as much as 0.5% as investors initially responded to the CPI data.
The S&P 500 rose 0.5%. It is close to its biggest gain of the day at 0.6% and far from the bottom, when the broad index fell 0.8%.
The Nasdaq Composite gained about 0.5%, slightly off session highs. At its lowest point, the index lost 1.2%.
—Alex Harring
Language from Fed speakers could move markets for rest of week, analyst says
With the CPI in line with economists’ expectations, investors will now turn to Fed speakers with events on Thursday and Friday for insights into future interest rate moves, according to Huw Roberts, head of analysis at Quant Insight .
Richmond Fed President Tom Barkin is the only speaker who has yet to begin his remarks on Thursday. He will be at a financial forecasting event hosted by the Virginia Bankers Association and the Virginia Chamber of Commerce. His statements are scheduled to begin at 12:40 p.m
Here’s who’s on the docket Friday:
- Boston Fed President Susan Collins, who will deliver the keynote address at 9 a.m. at the Boston Fed’s “Housing, Place, and Flexible Work: The Future of the New England Economy” conference.
- Minneapolis Fed President Neel Kashkari, who will speak on the economic challenges facing the manufacturing sector at 10 a.m.
- Philadelphia Fed President Patrick Harker to discuss 2023 economic trends in Philadelphia at 10:20 a.m.
Collins told the New York Times on Wednesday that he was leaning toward a 0.25% rate hike at the next meeting.
— Alex Harring, Betsy Spring
The IRA bill doesn’t change much for Tesla, says Bernstein
Bernstein maintains its underperform rating on shares of electric vehicle maker Tesla, even though the Inflation Reduction Act offers tax credits for clean vehicles.
“While the interim rules are clearly positive for demand, the prevailing uncertainty around EV subsidies is not optimal,” Neil Beveridge wrote in a note on Thursday. “With a large order book and largely supply-driven demand, it is unclear how stimulating the interim rules can be. Also, rebates are credits on tax returns (>1 year distance).”
Also, the initial classification of Tesla’s Model Y as an automobile despite having at least five seats was a negative surprise, he said.
“The US Model Y today accounts for 50% of US sales and 23% of global sales. Another 80% of Model Y units are 5-seaters, which will not be eligible for EV credits unless either Tesla lowers the price or consumers spend an extra $3,000 for the 7-seater,” Beveridge said.
Tesla’s SR Model 3 will initially qualify for the discount, but it only accounts for 15% of sales in the U.S. and about 7% globally. The company’s battery manufacturing should qualify for production credits, but may have to be shared with Panasonic.
“We’re more torn on TSLA stock given its recent pullback. On the one hand, the stock is now trading near our 2050 DCF (~$120 per share) and investor sentiment is awful,” he said. said Beveridge. “That said, we believe many investors are underestimating the magnitude of the demand challenges facing Tesla and that the 2023/24 numbers could materially reset.”
He is also worried about the potential for broader market pressure, higher rates and slower consumer spending to weigh on stocks.
—Carmen Reinicke
Evercore ISI downgrades Hewlett Packard Enterprise
Evercore ISI downgraded Hewlett Packard Enterprise to Outperform on Wednesday.
Among the reasons the Wall Street firm cited were moderate IT spending and tighter budgets this year, as well as moderation in server revenue from its double-digit boost last year.
“We believe 2023 is balanced between relatively bullish full-year guidance (backed by a healthy backlog) and macro uncertainty affecting IT spending as well as moderation in AUP growth (in particular the servers),” analyst Amit Daryanani wrote in a note.
Shares closed 2022 slightly higher and are up nearly 4% so far this year.
Hewlett Packard Enterprise is up nearly 4% year to date
Buy Cinemark now after its 30% drop, Avatar hit, says JPM
Cinemark shares have fallen more than 30% in recent weeks, but are poised to rebound after the success of “Avatar,” according to JPMorgan. This makes now a good time to pick up shares.
JPMorgan upgraded Cinemark to overweight from neutral and maintained its price target of $15, implying a more than 57% upside from where the stock is currently trading. Shares rose 2.5% in premarket trading on the news.
“After a 31% decline in shares since early December (compared to SPX -3%), we believe the risk/reward is more favorable to take a positive view on the stock,” wrote the analyst David Karnovsky in a note on Thursday.
CNBC Pro subscribers can read more here.
—Carmen Reinicke
These restaurant stocks are already up double digits in 2023
2023 has just begun, but some restaurant stocks have already posted double-digit gains to date.
Many popular restaurant names in the S&P 1500 have broken above their 50-day moving averages, settling into overbought and, in some cases, extreme overbought territory, according to data compiled by Bespoke Investment Group.
Some overbought names include Bloomin’ Brands, Cheesecake Factory, Dave & Buster’s and Brinker International, with shares up more than 15% each.
Shares of Shake Shack have risen the most among the stock group, rising more than 29% since the start of 2023 after falling about 42% in 2022.
Shares of Shake Shack are up more than 29% this year
The CPI shows that shelter inflation is still a concern
Housing costs, which include rent, rose more than expected in December’s consumer price index, and that’s an area economists are watching closely.
Housing increased by 0.8%, or 7.5% compared to a year ago. Some economists had expected a 0.6% gain in housing, which represents 40% of the core CPI. CPI housing costs are known to lag real rental market data.
“In this single month-over-month report, there is almost no inflation outside of housing,” said Wilmington Trust Chief Economist Luke Tilley. “Goods prices are collapsing mainly due to motor vehicles and computers and laptops and technology. Used vehicle prices are down. 27.5% at an annualized rate over the past three months, and it is likely keep falling.”
Tilley expects shelter inflation to slow in the next two months. As for the overall CPI, it fell by 0.01% as expected.
Greg Peters, co-chief investment officer at PGIM Fixed Income, said rising shelter inflation is something to watch. He said the market had expected a slightly larger fall in headline CPI.
“I still think it’s pretty good. I think the numbers will continue to go down. The real question is where does it start to level off?” Peters said. “That’s the part that should be the focus. It’s great that the CPI is coming down mechanically, and there’s some good news in the report. But that doesn’t mean the Fed is getting close enough to its aim to make them feel comfortable.”
Tilley said he expects 2023 to be different from 2022, where inflation surprised to the upside. “We could very well see in 2023 the opposite of what happened in 2022 with surprising downward inflation,” he said.
–Patti Domm
Fed’s Harker predicts smaller interest rate hikes
Philadelphia Federal Reserve President Patrick Harker said he believes the central bank can further reduce interest rate hikes.
“I expect we’ll raise rates a few more times this year, although, in my view, the days of raising them 75 basis points at a time are certainly gone. In my view, 25 basis point hikes will be appropriate. Go ahead.” , the central bank official said in a speech on Thursday morning.
“At some point this year, I expect the policy rate will be restrictive enough to keep rates there…