Nasdaq Index, Dow Jones, S&P 500 News: GDP Growth, Easing Inflation Fuel Rally Before INTC Earnings

Key Points

• GDP Exceeds Expectations, Fueling Bullish Sentiment
• Inflation Eases, PCE Index Shows Notable Drop
• Divergent Corporate Earnings Affect Sector-Specific Stocks
• Chipmaker Intel (INTC) reports after the close

Stocks Surge on Strong GDP and Lower Inflation

The major US stock indexes soared on the opening on Thursday as investors reacted to robust economic data and encouraging corporate earnings, with a bullish short-term forecast in focus.

At 14:39 GMT, the blue chip Dow Jones Industrial Average is trading 37927.81, up 121.42 or +0.32%. The benchmark S&P 500 Index is at 4890.31, up 21.76 or +0.45% and the tech-weighted Nasdaq-100 Index is trading 15559.64, up 77.72 or +0.50%.

GDP Soars Past Expectations

In a surprising turn, the Gross Domestic Product (GDP) data revealed that the U.S. economy expanded by an impressive 3.3% in the fourth quarter, surpassing the anticipated 2% growth rate. This unexpected surge indicates strong economic resilience, which could fuel a short-term bullish sentiment.

Inflation Shows Signs of Easing

The report also brought relief on the inflation front. The price index for personal consumption expenditures (PCE) rose by 2.7% annually, a notable drop from the 5.9% reported a year ago. The core PCE, excluding food and energy, increased by 3.2%, down from 5.1%. This suggests that inflationary pressures are easing, potentially contributing to a bullish outlook in the short term.

Corporate Earnings Mixed

Investors closely monitored corporate earnings reports. Tesla faced a setback, with its shares falling nearly 9% due to disappointing fourth-quarter results and a caution about lower vehicle volume growth in 2024. In contrast, IBM saw its shares surge by over 6% after surpassing Wall Street’s expectations in both earnings and revenue. These mixed earnings results may lead to short-term fluctuations in respective stock prices.

Airline Stocks in Focus

Several airline stocks made significant moves in response to their financial reports. American Airlines gained more than 4%, while Southwest and Alaska also posted gains of more than 1%. With a majority of S&P 500 companies exceeding Wall Street expectations in this earnings season, short-term bullish momentum in the airline sector may persist.

Short-Term Concerns

Despite the overall positive sentiment, concerns linger. Analysts at BTIG caution that the divergence between mega-cap tech stocks and other sectors could lead to short-term uncertainty. If laggard sectors fail to catch up in the near term, it may signal a potential downturn in the broader market. Finally, chipmaker Intel (INTC) reports after the close. It’s one of the laggards, having trouble catching up to the big boy AI chipmakers like NVIDIA.

In conclusion, the U.S. stock market has strong short-term bullish potential following impressive GDP growth and a slowdown in inflation. Positive corporate earnings reports, especially in the airline sector, add to the upbeat sentiment. However, short-term caution is advised, given the ongoing divergence among different sectors.

Technical Analysis

The daily chart shows a bullish trend in the S&P 500 E-mini Futures, as evidenced by the upward trajectory of both the 50-day and 200-day Simple Moving Averages. These MAs indicate a solid bullish momentum over the period displayed, with the 50-day MA potentially serving as a dynamic support level that traders might watch closely. The price action is consistent with an uptrend, characterized by higher lows and higher highs.

In terms of technical support, the level around 4636.75 stands out as a significant area where the price has previously consolidated, suggesting it could act as a springboard for future rallies if tested. The recent bullish candle hints at sustained buying interest, possibly setting the stage for further advances.

Given the current chart patterns and the position of the MAs, the intermediate-to-longterm forecast for the S&P 500 E-mini Futures could remain bullish. Traders may look for the continuation of the uptrend and watch for any pullbacks to the 50-day MA as potential buying opportunities.