S&P 500 flat as investors look ahead to next inflation report, earnings season

Stocks were little changed on Tuesday as investors looked to economic data and corporate earnings later in the week for signs of how the Federal Reserve is moving forward on interest rates.

The Dow Jones Industrial Average lost 4 points. The S&P 500 was flat, while the Nasdaq Composite added 0.1%.

The S&P 500 was approx 1.1% in the first five days of trading for 2023 As of Monday, some say it bodes well for the rest of the year. The Nasdaq has rallied in recent days as hopes of slowing inflation have pushed investors to short out tech stocks.

Billionaire investor Paul Tudor Jones was bullish on the stock market Tuesday morning, saying the Federal Reserve will not crash the economy and stop raising rates before doing so. Jones, who said he did not make a specific forecast, said there has been strong demand for stocks this year from share buybacks and mergers.

“You’ve probably got a trillion dollars of short-term demand in U.S. stocks,” Jones said on CNBC on Tuesday. “Squawk Box.” “Where are the sales going to come in to meet the demands from the mix of buybacks, corporate line items, some buybacks and M&A? It’s a significant amount. Cederis paribus, all things being equal, the stock market will go up. 7% or 8% this year.”

Investors entered the New Year worried that higher Fed rates could push the economy into recession. But many seem to be betting that inflation will begin to ease in the early days of 2023. Later in the week, they will watch consumer price index data due on Thursday and earnings from major banks on Friday.

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“We’re going to be in a very tight range until at least Thursday with the CBI report, and we’ll be directionless until the kickoff to earnings season later this week,” Megan Hornman said. Officer at Verdens Capital Advisors. “Right now, I think the market is kind of stuck in the middle of waiting for economic data and absorbing some of the Fed’s speech.”

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