Microsoft Surge Helps Lift Dow 370 Points; Meta Jump Bolsters NASDAQ’s Performance

The major U.S. stock indexes soared on Monday as investors looked ahead to tomorrow’s U.S. consumer inflation report. The price data could telegraph the path of the Federal Reserve’s future interest rate hikes.

Megacaps were the focus for investors on Monday as investors pounced on beaten up tech-related heavyweights that contributed heavily to the S&P 500 technology sector and the tech-weighted NASDAQ Composite’s strong gains.

On Monday, the blue chip Dow Jones Industrial Average settled at 34245.93, up 376.66 or +1.11%. The benchmark S&P 500 Index finished at 4137.29, up 46.83 or +1.14% and the NASDAQ Composite closed at 11891.79, up 173.67 or +1.48%.

Tech Stocks Grabbing Headlines on Monday

Meta jumped about 3% after the Financial Times reported on Sunday that the company was preparing to announce a new round of job cuts, adding to layoffs last November.

Microsoft rose more than 3%, Nvidia gained 2.5%, and Apple and Amazon each rose over 1%.

Tech Sector Shines

Ten of the 11 S&P 500 sector indexes rose, led by information technology up 1.77%, followed by a 1.46% gain in consumer discretionary, according to Reuters. The energy index dipped 0.6%.

Dow Posts Impressive Gains

The blue chip Dow Jones industrial Average also posted a solid gain on Monday that was strong enough to compete with the move in the NASDAQ. Microsoft, a major contributor to the S&P and NASDAQ gains, led the Dow’s gains. Nike and Salesforce each gained 2.4%, while Intel added 2.7%.

Other Stocks in the News

Fidelity National Information Services Inc plunged 12.5% following the banking and payments processing conglomerate’s decision to spin off its merchant payments business.

Coca-Cola rose 1.6% ahead of its quarterly report due out early on Tuesday.

Lackluster Earnings Season Continues

As U.S. quarterly earnings reports wind down, 69% of the S&P 500 firms that have reported results so far have exceeded profit expectations, according to Refinitiv data. Analysts expect December-quarter earnings to have fallen nearly 3% from a year earlier.

Focus Shifts to Tuesday’s January Consumer Price Index Data

The focus for the early part of this week is on Tuesday’s January consumer price index (CPI) report. Economists see month-over-month headline inflation rising 0.4%, but headline year-over-year January CPI inflation is expected to fall from 6.5% in December to 6.2%.

Ahead of the report, some investors appear to be betting on a solid CPI print on Tuesday that shows inflation is cooling and that a pause or pivot in Fed rate hikes may be near. Essentially, they are buying into Fed Chairman Jerome Powell’s disinflation narrative.

Meanwhile, there is major risk for stock market investors ahead of the CPI report. A miss to the upside in the data would likely signal that the Fed will hike interest rates even more, putting downward pressure on equities.