US close: Markets gain ahead of CPI data, Meta leads tech stocks higher

dl wall street wall st new york city nyc ney york stock exchange nyse nasdaq dow jones industrial average djia trading us usa united states of america 2023120702241 — Sharecast graphic / Josh White

After a tentative start, US stocks finished with decent gains on Wednesday with the S&P 500 inching ever closer to its record high, though market sentiment was still cautious ahead of latest inflation figures due out the following session.

The Dow finished 0.5% higher, the Nasdaq rose 0.8%, while the S&P 500 gained 0.6% to 4,783.45, just a handful of points away from the all-time high of 4,796.56 reached in January 2022.

Investors were looking ahead to the latest consumer price index report, due out on Thursday, with economists expecting to see CPI rising 3.2% year-on-year in December, up from 3.1% the month before. Core inflation, however, is expected to ease to 3.8% from 4.0%.

Market participants will thumb over the data in search of any hints as to exactly when the central bank may see fit to start cutting interest rates, with expectations being reeled back in recent days.

"An upside surprise has the potential to undermine the narrative of an early Fed rate cut, as well as pushing yields back up again," said analyst Michael Hewson from CMC Markets.

On a similar vein, New York Fed president John Williams said rates could need to stay elevated "for some time" until inflation comes closer to the Fed's 2% target. "We still have a ways to go," he said in a speech on Wednesday.

In other news, this week will see the start of fourth-quarter earnings season in the US with banking giants JPMorgan Chase, Bank of America, Citigroup and Wells Fargo all due to unveil their latest figures on Friday.

Meanwhile, US mortgage application volume rose 9.9% in the week ended 5 January, according to the Mortgage Bankers Association, the biggest increase in a year. Applications to refinance a home loan surged 19% week-on-week and were 30% higher year-on-year, while applications for a mortgage to purchase a home rose 6% week-on-week but were 16% lower than at the same time a year ago.

Meta leads tech stocks higher

Retailers and tech stocks were leading the risers on Wednesday, with Home Depot, Microsoft, Walmart, Salesforce, IBM and Apple among the best performers on the Dow.

Meta shares rose 3.7% to hit their highest level in over two years after positive comments from analysts at Mizuho Financial Group, which hiked its target price for the shares from $400 to $470, up from $370.47 by the close. Mizuho said the market's current revenue growth forecast for 2024 "appears conservative, considering tailwinds from product improvements, increased engagement (AI content distribution), and rising demand of Chinese advertisers".

Intuitive Surgical was a high riser, jumping over 10% after the medtech company beat forecasts with its fourth-quarter results due to a rise in surgeries using its robotic device da Vinci.

Dow Jones - Risers

Home Depot Inc. (HD) $356.80 3.06%
Microsoft Corp. (MSFT) $382.77 1.86%
Walmart Inc. (WMT) $161.29 1.24%
McDonald's Corp. (MCD) $294.24 1.11%
Salesforce.Com Inc. (CRM) $264.13 1.07%
Nike Inc. (NKE) $103.77 1.00%
Boeing Co. (BA) $227.84 0.92%
International Business Machines Corporation (CDI) (IBM) $160.96 0.72%
Cisco Systems Inc. (CSCO) $50.24 0.66%
Apple Inc. (AAPL) $186.19 0.57%