Stocks advanced Tuesday as investors continued building on the new year’s early rally while awaiting economic data and corporate earnings coming later in the week.
The Dow Jones Industrial Average gained 121 points, or 0.4%. The S&P 500 traded up 0.5%, while the Nasdaq Composite added 0.7%.
The S&P 500 was up about 1.1% in the first five trading days of 2023 through Monday, which some say is a good omen for the rest of the year. The Nasdaq has rallied in recent days as optimism over cooling inflation pushed investors to beaten-up technology stocks.
Billionaire investor Paul Tudor Jones was optimistic on the stock market Tuesday morning, saying the Federal Reserve likely would not break the economy, halting rate hikes before it does so. Jones, who noted he wasn’t making a specific forecast, said there was huge demand for stocks on the way this year due to share repurchases and mergers.
“You’ve probably got something just under a trillion dollars of excess demand in U.S. stocks,” Jones said Tuesday on CNBC’s “Squawk Box.” “Where is the selling going to come to offset that that demands coming from buybacks, from the corporate line items, from some combination of buybacks and M&A? That’s a significant amount. Ceteris paribus, everything being the same, the stock market would be up 7% or 8% this year.”
Investors came into the new year worried that higher Fed rates could tip the economy into a recession. However, many appear to be mounting bets that inflation is starting to ease. They will watch consumer price index data coming Thursday and big bank earnings on Friday for any clues into the health of the economy or signals of how the Fed will move interest rates going forward.
“We’re going to probably be in this really tight range and most likely directionless until we get through at least Thursday with the CPI report and then the kickoff to earnings season, which is also later this week,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “Right now, I just think the market’s kind of caught in the middle of waiting for the economic data and absorbing some of the Fed speech.”