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U.S. labor costs growth slows in fourth quarter
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McDonald's, Caterpillar slip after earnings
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Exxon, GM, UPS rise after their results
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Fed decision on interest rates on Wednesday
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Indexes up: Dow 0.48%, S&P 500 0.73%, Nasdaq 0.95%
(Adds midafternoon trading)
By Lewis Krauskopf, Johann M Cherian and Shreyashi Sanyal
NEW YORK, Jan 31 (Reuters) - Major U.S. stock indexes
rose on Tuesday as labor cost data encouraged investors about
the Federal Reserve's aggressive approach to taming inflation a
day ahead of the central bank's critical policy decision.
Investors also digested a full plate of earnings reports,
with share declines in Caterpillar and McDonald's following their results capping gains on the Dow.
U.S. labor costs increased at their slowest pace in a year
in the fourth quarter as wage growth slowed, Labor Department
data showed. The U.S. central bank on Wednesday is expected to
hike the Fed funds rate by 25 basis points, following a 2022 in
which the Fed aggressively boosted rates to control soaring
inflation.
"The fact that we have had goods inflation cooling, we have
had housing cool, and the last shoe to drop is probably this
labor services inflation – we may be getting early indications
of that," said Mona Mahajan, senior investment strategist at
Edward Jones.
The Dow Jones Industrial Average rose 163.23 points,
or 0.48%, to 33,880.32, the S&P 500 gained 29.51 points,
or 0.73%, to 4,047.28 and the Nasdaq Composite added
107.90 points, or 0.95%, to 11,501.72.
Gains were widespread, with 10 of the 11 S&P 500 sectors in
positive territory, led by materials and consumer
discretionary . Utilities were the lone
sector logging a decline.
The S&P 500 was on track to post its first increase for the
month of January since 2019, following a brutal 2022 in which
the benchmark index sank 19.4%.
Aside from the Fed's rate decision on Wednesday, Chair
Jerome Powell's news conference will be scrutinized for whether
the rate-hiking cycle may be coming to a close and for signs of
how long rates could stay elevated.
"Jerome Powell and team are probably looking at this easing
of financial conditions that has happened over the last month,
and we will see if they try to push back against it to any
extent," Mahajan said. "I don’t think they would want markets to
move up too far, too fast either."
In earnings news, Exxon Mobil Corp shares rose 2%
after the oil major posted a $56 billion net profit for 2022,
setting not only a company record but a historic high for the
Western oil industry.
United Parcel Service Inc shares climbed 4.4% after
its quarterly profit topped estimates, while General Motors Co shares jumped 8% after it forecast stronger-than-expected
earnings for 2023.
Caterpillar Inc shares slumped over 3% as the machinery
maker's fourth-quarter earnings slid by 29%. McDonald's shares
slumped 1.8% after the burger chain warned inflation will weigh
on margins in 2023.
A busy week for markets will also include reports in coming
days from Apple Inc , Amazon.com Inc and
Alphabet Inc , central bank meetings in Europe and the
monthly U.S. employment report.
Advancing issues outnumbered declining ones on the NYSE by a
4.28-to-1 ratio; on Nasdaq, a 3.11-to-1 ratio favored advancers.
The S&P 500 posted 6 new 52-week highs and no new lows; the
Nasdaq Composite recorded 73 new highs and 19 new lows.
(Reporting by Lewis Krauskopf in New York, and Johann M Cherian
and Shreyashi Sanyal in Bengaluru
Editing by Maju Samuel and Matthew Lewis)
