US stocks are rallying after some standout earnings and economic data that suggests disinflation trends should remain in place for a while. ​ Wall Street is slowly growing confident that this week’s Fed rate hike might end up being the last one in this tightening cycle. ​

US Data

The quarterly employment cost index provided optimism that wage pressures are cooling. ​ The fourth quarter ECI report printed at 1.0%, a decline from the 1.2% prior and lower than the 1.1% consensus estimate. ​ Some analysts were fearful that we could have seen a reading as high as 1.5%, so this report supports the idea that disinflation trends should remain in place.

The ECI reading is one of the key statistics that Fed Chair Powell follows, so markets quickly dialed down those March rate hike bets.

Consumer confidence edged lower and expectations continued to slide. ​ The Dallas Fed regional survey also showed manufacturing activity remains depressed. ​ The economy is weakening and that is fueling Fed rate cut bets at the end of the year. ​

Earnings Blast

Exxon

Exxon delivered mixed earnings as they delivered a strong EPS beat and posted soft revenue, but failed to come anywhere close to matching Chevron’s buyback announcement.

UPS

UPS earnings were mixed but it seems investors are liking the decision to raise prices and cut costs. ​ UPS margin and CAPEX guidance were in-line with expectations and the $5 billion buyback announcement was met with open arms.

General Motors

GM delivered a textbook impressive earnings report; a robust beat with both the top and bottom lines and better-than-expected guidance that will surprise some analysts. ​ CEO Barra noted that they are ‘on track’ to reach their EV production goals, which is benefitting from improving supply chains.

McDonald’s

Despite strong beats with EPS, revenue and comp sales, the fast-food giant shares tumbled as short-term inflationary pressures remained. ​ McDonald’s is expected to open 1900 new restaurants this year and is guiding an operating margin of around 45%.

Crypto

Bitcoin is back above the $23,000 level as risk appetite tentatively returns to Wall Street. ​ Crypto fundamentals are taking a backseat here and the primary driver is what the overall appetite is for risky assets. ​ January is turning out to be a great month for the S&P 500, the best January since 2019, and even a better month for Bitcoin which is up almost 40%.

In 2023, price action across all the top cryptos has been rather constructive despite a serious lack of the typical buzz that comes with these moves. Bitcoin appears to have massive resistance at the $24,000 level, so if the rally stalls after the Fed and mega-cap tech earnings fireworks, a consolidation back towards $20,000 could happen. ​

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Senior Market Analyst, The Americas at OANDA

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.

• SEO Powered Content & PR Distribution. Get Amplified Today.
• Platoblockchain. Web3 Metaverse Intelligence. Knowledge Amplified. Access Here.
• Source: https://www.marketpulse.com/20230131/stocks-rally-as-eci-softens-and-confidence-weakens-mixed-earnings-exxon-ups-gm-mcdonalds-a-great-january-for-cryptos/