Stocks rose on signals the main engine of the world’s largest economy remains solid, which bodes well for the strength of Corporate America.
About 410 shares in the S&P 500 advanced after upbeat outlooks from industry heavyweights like Tesla Inc., Meta Platforms Inc. and International Business Machines Corp. Traders are now eagerly awaiting Apple Inc.’s results due after the closing bell. While the majority of companies have so far exceeded Wall Street’s expectations, disappointing forecasts have been met with selloffs, with Microsoft Corp. and United Parcel Service Inc. being the latest examples.
The US economy expanded at a strong pace at the end of 2024, more than offsetting drags from a strike at Boeing Co. and much leaner inventory investment. Consumer spending, which comprises the largest share of economic activity, advanced at a 4.2% pace — the first time since late 2021 that outlays have exceeded 3% in consecutive quarters.
To Neil Birrell at Premier Miton Investors, while the data is all a bit historic now, the economy is “doing just fine.”
“Overall, the economy is on firm footing heading into 2025, which should support risk assets given the strong linkage between economic growth and corporate profits,” said Josh Jamner at ClearBridge Investments.
The S&P 500 rose 0.2%. The Nasdaq 100 was little changed. The Dow Jones Industrial Average added 0.3%. A gauge of the “Magnificent Seven” megacaps fell 0.3%. The Russell 2000 of small firms gained 1.1%.
The yield on 10-year Treasuries declined two basis points to 4.51%. The Bloomberg Dollar Spot Index fell 0.3%. Gold hit a all-time high. Euro-zone bonds remained higher after the European Central Bank lowered borrowing costs.