Stocks rose Friday and capped off a winning week fueled by better-than-expected economic growth and a pop in Tesla shares.
The Nasdaq Composite jumped 0.95% to settle at 11,621.71, while the S&P 500 gained 0.25% to close at 4,070.56. The Dow Jones Industrial Average added 28.67 points, or 0.08%, to finish at 33,978.08.
All the major averages posted a positive week and are on pace for a month of gains. The tech-heavy index rose 4.32% and closed out its fourth week of gains. It's on pace for its best monthly performance since July. The S&P and Dow added 2.47% and 1.81%, respectively, this week.
Earnings season pressed on, with strong guidance boosting American Express shares by 10.5% despite a top-and bottom-line miss. Some chip stocks rose even as Intel slumped more than 6% on a dismal earnings report that missed expectations.
Tesla rose 11% Friday, and more than 33% for the week after reporting record revenue. It marked the electric vehicle stock's best weekly performance since May 2013.
So far this year, markets have bucked 2022's selloff trend. The Dow is up 2.5%, while the S&P has gained 6%. The Nasdaq has surged 11%.
"We're putting the final touches on an extremely strong January on the heels of lower inflation, and an economy that's hanging in there," said Ryan Detrick, chief market strategist at Carson Group. "We're not out of the woods though. We've still got the Fed next week, and they might want to throw some water on this rally."
Investors weighed more economic data Friday ahead of next week's Federal Reserve policy meeting. The personal consumption expenditures price index, excluding energy and food, showed prices rose 4.4% from a year ago, the Commerce Department said, and in line with the Dow Jones estimate. So-called PCE is a preferred inflation gauge for the Fed.
A better-than-expected fourth-quarter gross domestic product report Thursday also helped stoke hopes that the Fed may manage a soft landing.
These are some of the last data points before the central bank's widely expected 25 basis point hike.
All the major averages capped off a winning week on Friday.
For the session, the Nasdaq Composite jumped 0.95% to settle at 11,621.71, while the S&P 500 gained 0.25% to close at 4,070.56. The Dow Jones Industrial Average added 28.67 points, or 0.08%, to finish at 33,978.08.
— Samantha Subin
Meta Platforms looks setup for success heading into earnings season, according to Mizuho.
"4Q consensus tracking inline to better," wrote analyst James Lee in a note to clients Thursday. "Our ad checks with leading agencies show that META's 4Q22 revenue appears on-track, especially based on seasonality analysis that shows a high correlation over the past few quarters."
Lee said the stock should see upside on its margins, given that Meta Platform's is notoriously known for guiding higher on its expenses.
Going forward, he also views consensus estimates for the first quarter as "reasonable," especially as foreign exchange headwinds ease. Lee also projects limited downside to 2023 estimates.
"We view the revenue growth downside for FY23 to be limited at 5% YoY, comping against three negative quarters in FY22," he wrote. "At the same time, we see positive leading indicators in operating metrics as ad volume has been accelerating for the past 5 quarters due to improved user engagement.
More ad agencies optimizing Meta Platform's Reels product in 2023 could also help with monetization, he said.
— Samantha Subin
Tesla is not the electric vehicle stock surging on Friday, as shares of Lucid have jumped more than 40% in wild trading.
The stock has been halted for volatility multiple times for volatility during the trading session. The gain has pushed Lucid's market cap back above $20 billion.
— Jesse Pound
How stocks handle a bounce in the U.S. dollar could be a sign of strength for markets and hint that the January rally may last.
The U.S. dollar surged in 2022, with the dollar index hitting a peak of 114.78 in September. At the same time, stocks have sold off due to the dollar strength, its impact on U.S. Treasury yields and what it may mean for companies with a global footprint.
But since September, the dollar index has slipped and is now nearing a range that could lend support to the S&P 500.
CNBC Pro subscribers can read more here.
—Carmen Reinicke
With one hour left in trading, the major market market averages are on pace to end the week on a positive note.
The Nasdaq Composite is leading the way with a gain of 1.3%. The S&P 500 and Dow are up 0.7% and 0.5%, respectfully.
Small cap stocks are enjoying a successful day as well, with the Russell 2000 up 0.6%.
— Jesse Pound
Monetizing messaging apps could present "another leg of growth" for Meta Platforms going forward, according to Baird.
"Business messaging is one of the key investment priorities for Meta, not only facilitating more engagement in the apps, but also unlocking incremental monetization," wrote analyst Colin Sebastian in a note to clients Friday, noting that WhatsApp alone accounts for 2.4 billion daily active users.
WhatsApp alone, he said, could "serve as a significant spring-board to drive higher penetration of messaging ads and paid messages."
According to Baird's estimates, nearly $12 billion in revenues should stem from messaging ads and services in 2023. That figure is expected to more than double by 2027.
After the sharp rise in shares from its November lows, Baird views any pullback as an opportunity to buy shares, saying that the valuation still looks reasonable despite the upward move.
"While we shifted our tactical preference from Alphabet to Meta following the pullback post Q3 earnings, we believe it may take more than just a slight earnings beat to keep shares moving higher near-term," he wrote, adding that he is also "encouraged" by the ongoing rise in Reels use.
— Samantha Subin
The first major wave of earnings season is over, with 29% of the S&P 500 having already reported, according to FactSet.
John Butters, the firm's senior earnings analyst, sent out a note on Friday that shows how the results stack up so far.
— Jesse Pound
Don't surprised if rate cuts from the Federal Reserve don't come until early 2024, said Anna Han, equity strategist at Wells Fargo Securities.
"We think that these kind of cuts are going to be a much later in the year story, if not early next year," she said.
Economists in recent weeks have begun projecting a reduction in rates as soon as this year. But Han said that may even prove to be a little too soon given the state of the economy.
While Thursday's GDP data is "encouraging," boosting some some investors' hopes for a soft landing, the labor market paints a starkly different picture.
"There is a little bit of concern that if the economy is continuing to plod along, and labor markets stay strong, perhaps inflation as well may be stickier than expected, and maybe we won't get a pivot in the Fed," she said.
— Samantha Subin
How poor were Intel's fourth-quarter earnings results?
"Even our Intel model going back to 1992 doesn't have a loss this bad," Citi said.
Still, Citi analyst Christopher Danely reiterated a neutral rating on Intel, while lowering estimates, saying that he expects the chip maker will bottom in the first quarter of 2023.
"Yesterday after the close, Intel missed and guided well below Consensus driven by the PC and data center downturn as previewed as sales from both the PC and data center markets (81% of revenue) are expected to decline roughly 20% QoQ," Danely wrote in a Friday note.
"While the company is committed to a cost reduction plan of $8.0-$10.0 billion by 2025, it doesn't help the core manufacturing problem and we believe Intel's ongoing investments on growth markets may not perform as expected," he added.
— Sarah Min
These are some of the stocks moving the most during midday trading:
Chevron — Chevron shares fell nearly 5% after the company reported quarterly earnings of $4.09 per share ex-items, which was short of the analysts' estimate of $4.38 per share, according to Refinitiv. The company cited asset writedowns and rising costs for the miss.
Silvergate Capital — The crypto-focused bank slid more than 22% after it suspended dividend payments on its Series A preferred stock, in an effort to preserve capital as it navigates recent crypto market volatility. The stock has been falling since November, after crypto exchange FTX, for whom Silvergate held deposits, collapsed in scandal.
Hasbro — Shares tumbled 6.7% after the toymaker warned of weak holiday quarter results and said it would cut 1,000 jobs, which equates to about 15% of its workforce.
Read the full list of stocks moving midday here.
— Tanaya Macheel
Tesla shares have surged more than 33% this week, putting the electric vehicle stock on pace for its best weekly performance since the week ended May 10, 2013, when it surged 40.72%.
If Tesla closes at these levels it would mark the stock's second-best weekly performance ever. As of 12:40 p.m. EST shares traded about 33.8% higher on the week.
The gains in Tesla shares follow the company's latest earnings report, which showed record revenue and an earnings beat. Shares surged more than 11% Friday.
The sharp uptick in Tesla's stock comes after shares plummeted 65% in 2022 and suffered their worst ever month, quarter and year.
Gains in Tesla also boosted the S&P 500's consumer discretionary sector by more than 2%.
— Samantha Subin
Goldman Sachs is moving to the sidelines on Steel Dynamics, arguing that the company's recent outperformance and strong earnings have made it less underappreciated.
Analyst Emily Chieng downgraded the stock to neutral from buy while also increasing the price target by $4 to $118. The new price target reflects a 2.8% downside from Thursday's close, but an upside of 6.9% from where it closed Wednesday.
The stock traded down more than 1% Friday, after rising 10% during Thursday's session on the back of Wednesday's earnings report. It hit briefly hit a 52-week high Friday.
Chieng said the stock has rallied more than 57% since she first upgraded the stock in October, outperforming steel peers at around 37% and the S&P 500 at nearly 8%.
She said the share price now better reflects the strength of its business model and its future outlook following the latest earnings report. Steel Dynamics beat revenue and per-share earnings estimates from analysts polled by FactSet, with per-share earnings coming in 16% higher than the average analyst anticipated.
"While we remain constructive on both the broader outlook for US steel demand and the business fundamentals, we now see limited upside," she said in a note to clients Friday.
— Alex Harring
American Express shares surged more than 10% on Friday, as the credit card company's forecast is well ahead of Wall Street's expectations. Revenue is expected to grow 15% to 17% in 2023 from the prior year, while earnings climb to a range of $11-$11.40 per share.
On an earnings conference call, CEO Steve Squeri was extremely upbeat about the current trends that he's seeing. To Squeri, it doesn't feel as though we're on the brink of a recession.
"We can only run the business and forecast the business on what we're seeing, and what we're seeing is we're still seeing high consumer growth," Squeri said, according to a FactSet transcript.
Loan loss provisions were higher than expected in the latest quarter, but American Express said that's a function of higher loan balances, not any fears about consumers falling behind on payments. Delinquency rates are still below pre-pandemic levels.
Rivals Visa and Mastercard also were upbeat about consumer spending levels. Visa shares were higher in trading, while Mastercard shares slipped less than 1%.
Visa's beat on the top and bottom lines for its fiscal first quarter is not just a matter of one last strong period before a slowdown, according to Morgan Stanley.
Analyst James Faucette said in a note to clients that the credit card company appears "resilient and ready," with spending volume still running well above pre-pandemic levels.
"Trends remain fairly stable with expense levers ready if environment were to worsen. We see new flows and value-added-services providing support, with cross-border driving potential upside," the note said.
Faucette also highlighted global payments service Visa Direct as another bright spot for the company.
Morgan Stanley hiked its forecasts for earnings and revenue for Visa, and bumped the price target on the stock to $288 per share from $284. Visa's stock was up 2% in midday trading, hovering above $229 per share.
— Jesse Pound
The Global X Lithium & Battery Tech ETF was last up more than 7% week to date and headed for its best weekly performance since March 18, 2022, when it jumped 8.01%.
This also marks the fourth straight weekly gain for the ETF, which got a lift from Tesla, up more than 24% and on pace for its best week since January 2021.
Rivian and Albemarle have risen more than 13% and 12% this week, adding to the ETF's gains.
— Samantha Subin
UBS upgraded General Mills to a buy from neutral rating, saying that the stock's recent underperformance offers a good entry point for investors.
Although the Pillsbury and Cheerios maker's stock has fallen 12% since mid-December, compared a 5% loss for peers, UBS said it's optimistic about the company's outlook. The bank also believes investor concerns about the stock are overblown.
UBS lifted its price target to $88 from $85, implying almost 15% upside from Thursday's closing price.
CNBC Pro subscribers can read more about the upgrade here.
— Hakyung Kim
Almost two thirds of the 13 stocks in the S&P 500 that touched 52-week highs in early Friday trading were also trading at all-time highs. The list is broadening out from the energy/materials/resources focus of recent days. One of 13, Caterpillar, is also in the Dow Industrials.
Other notable highs outside the 500:
— Scott Schnipper, Christopher Hayes
Pending home sales increased in December, marking a turn from half-a-year of cooling and flying in the face of economists who expected another month of contraction.
Pending sales were up 2.5% in December from November, according to the National Association of Realtors' data. That marks the first time sales grew month-over-month since May.
Economists polled by Dow Jones, meanwhile, expected pending home sales to fall 1% in December from November.
Still, pending sales volume was down in all regions compared to the same month a year ago.
"This recent low point in home sales activity is likely over," said Lawrence Yun, the association's chief economist. "Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market."
— Alex Harring
Investors appear to be reading Intel's big fourth-quarter miss as a company-specific issue rather than a warning sign for chip stocks more broadly.
Even with Intel down more than 7% on the day, the VanEck Semiconductor ETF is down less than 1%. Shares of Nvidia and NXP Semiconductors are up more than 1%, while Micron and Marvell Technologies are also up for the day.
Shares of Intel are still positive for the year despite Friday's declines. The VanEck ETF is up 18% in 2023.
—Jesse Pound
Consumer sentiment data from the University of Michigan for January came in stronger than anticipated.
January's reading came in at 64.9, slightly above the consensus estimate of 64.6 from economists polled by Dow Jones. The index quantifies the view of current and future economic conditions.
— Alex Harring