Stocks End Higher As Semiconductors Rally  Image: Shutterstock Stocks closed higher yesterday, led by the Nasdaq with a 1.35% gain, and turning higher for the week. The S&P was up 0.88%, and need just another 2.89 points or 0.06% to get into the green themselves. The Dow added 0.54%, and they are just a third of a percent away from being positive for the week as well. A bullish earnings report from Taiwan Semiconductor yesterday, where they projected 20% revenue growth, sent shares soaring by 9.79%. They also posted a 5.11% positive EPS surprise, and a 3.33% positive sales surprise. The positive outlook lifted other semi's and tech names in general.
Also helping the market was news that Congress passed a continuing resolution (CR) to fund the government, at least until March, preventing a government shutdown. Hopefully, a deal can get done before the March 1 and March 8 deadline (the package is broken up into two parts), so a shutdown can be avoided then. But that's for another day. Yesterday's Housing Starts and Permits report showed Starts beating expectations at 1.460 million units (annualized) vs. views for 1.425M, although less than last month's 1.525M. Permits also beat expectations at 1.495M vs. the consensus for 1.478, and beat last month's 1.467M as well. Weekly Jobless Claims fell by -16,000 to 187,000 vs. estimates for 206K. It was the lowest level since September 2022. Although, the smoother 4-week moving average came in at 203.25K. And the Philadelphia Fed Manufacturing Index improved to -10.6 vs. last month's downwardly revised -12.8, but missed the consensus for -6.7. In other news, Atlanta Federal Reserve President, Raphael Bostic, said he expects the Fed to begin cutting rates in Q3, assuming economic conditions allow. For him, that's a faster timeline than his previously expected Q4 commencement. But that's still at odds with the market's expectation for a March or May start date. A lot can happen in a couple of months (and even more in 6 months). But the outlook is still for cuts at some point in time this year. And the Fed still seems to think it'll be 3 cuts, even though the market seems to think it'll be more.
The next FOMC announcement isn't until January 31. In the meantime, we'll get another inflation report on January 26 with the Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge. It's expected to show easing inflation, just like the CPI and PPI reports did earlier this month. While nobody is expecting the Fed to cut this month, everybody will be listening for any hint as to when they might begin. Until then, the focus will be on earnings. And that's great news, since stocks typically go up during earnings season. Only one more trading day left. With the Nasdaq already up for the week, it won't take much to put the other indexes in the plus column either. And a little bit of good news today could do it. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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