US Stock Market Rally in 2023: Inflation Dips and Key Stocks Surge
Explore how easing inflation in December 2023 propelled US equity markets higher, with notable gains in airlines, tech, and energy sectors, alongside shifts in bonds and cryptocurrencies.
Bill McColl brings over 25 years of expertise as a senior producer and writer across TV, radio, and digital platforms, leading news teams through major global events.
Highlights from the Market
- All three major US indexes advanced, marking a positive day for equities.
- The Consumer Price Index (CPI) declined month-over-month for the first time since 2020, signaling easing inflation pressures.
- American Airlines (AAL) and United Airlines (UAL) shares rose sharply by 9% and 7% respectively, following American Airlines' upgraded Q4 profit and sales forecast.
The US stock markets climbed steadily, with the Nasdaq achieving its fifth consecutive day of gains, driven by December's report indicating a continued slowdown in consumer price increases.
The Labor Department's Consumer Price Index (CPI) showed a month-over-month decrease for the first time since May 2020, and the annual inflation rate hit its lowest since October 2021. This development suggests the Federal Reserve might ease its stringent anti-inflation policies.
Walt Disney (DIS) led the Dow Jones with a 3.5% increase after activist investor Nelson Peltz announced a proxy contest to join the company's board. Boeing (BA) and Salesforce (CRM) also saw gains of around 3%, with Walmart (WMT) planning to distribute its pickup and delivery tech via Salesforce’s AppExchange. Other Dow components like Caterpillar (CAT) and Honeywell (HON) rose by more than 1%.
American Airlines (AAL) outperformed within the S&P 500 after significantly raising its fourth-quarter earnings and sales outlook. Shares of competing airlines and travel-related companies also climbed. Meanwhile, oil prices surpassed $78 per barrel, boosting energy sector stocks including Chevron (CVX) and SLB (SLB).
Gold prices increased to $1,900 per ounce, benefiting mining companies such as Newmont Corporation (NEM) and Barrick Gold (GOLD). The meme stock rally persisted, with Bed Bath & Beyond (BBBY), Party City (PRTY), and Carvana (CVNA) all surging over 45%.
Biotech Stocks Face Declines
Biotechnology stocks, including Illumina (ILMN) and Bio-Techne (TECH), experienced sharp declines. KB Home (KBH) cited rising interest rates and inflation for weaker demand and cancellations last quarter, causing its shares to drop. Dollar General (DG) also fell for the second consecutive day after Ohio's Attorney General sought legal action to block the retailer’s pricing strategies.
Inflation data impacted multiple markets: bond yields on the 10-year Treasury note fell, the US dollar weakened against the euro, pound, and yen, and cryptocurrencies surged. Bitcoin traded above $18,000 for the first time since the market turmoil triggered by FTX’s collapse in early November.
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