Most stocks jumped out of the gate Thursday, as optimism spilled over from Wednesday's Fed meeting, where the central bank issued its smallest interest rate hike since March 2022.
Solid guidance and big buyback news from Facebook parent Meta Platforms (META) – not to mention one of the best days ever for its stock – gave the risk-on rally some legs. The buying power wasn't widespread, though, as an earnings-induced selloff in drugmaker Merck (MRK) kept the blue-chip Dow Jones Industrial Average in check.
The major benchmarks swung higher late Tuesday after the Federal Reserve raised its benchmark interest rate by 25 basis points (0.25%). This followed a 0.50% hike in December and four straight 0.75% increases prior to that. Meanwhile, Fed Chair Jerome Powell said in a mid-afternoon press conference that the central bank will stay the course in its fight against inflation. Still, markets are actually pricing in rate cuts later this year, according to CME Group.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
On the earnings front, Meta Platforms said fourth-quarter earnings fell 52% year-over-year to $1.76 per share, missing analysts' consensus estimate. Revenue also declined in the three-month period, to $33.7 billion, though this was higher than expected. The company said it expects operating expenses and capital expenditures to be lower this year due to several cost-cutting measures, including layoffs it announced late last year. Meta also unveiled a new $40 billion stock buyback program. In reaction, META stock surged 23.3% – its biggest one-day gain since 2013.
At the close, the Nasdaq Composite was up 3.3% at 12,200, and the S&P 500 was 1.5% higher at 4,179. The Dow, on the other hand, finished down 0.1% at 34,053 as MRK slid 3.3% after the company gave lower-than-expected 2023 guidance due to falling COVID-19 vaccine sales.
The Best Recession-Proof Stocks
Recent stock market price action has been a welcome relief for investors following a turbulent 2022. Still, many market participants remain bearish early on in 2023, according to the results of Morgan Stanley's individual investor pulse survey. The majority of respondents (55%) listed inflation as the top risk to their portfolios, followed by recession risk (49%) and market volatility (44%).
"It's been a challenging market environment as investors navigate through high inflation, geopolitical concerns and recession fears," says Mike Loewengart, head of model portfolio construction at Morgan Stanley. "While these challenges aren't likely to disperse anytime soon, it's important for investors, where appropriate, to remain committed to their plan and consider the diversification of their portfolio. Moving money to the sidelines may sound tempting, but for investors with a lengthier time horizon, staying the course may be beneficial in the long run."
Fortunately for investors, there are solid portfolio choices they can make to help maneuver potential upcoming market challenges. These include choosing the best dividend stocks, as well as the best stocks for rising interest rates. There's also this list of top recession-proof stocks, which include high-quality companies that are well-positioned to traverse an economic downturn.
-
How to Navigate Your Medicare Advantage Plan in a DisasterIf you're a Medicare Advantage member in an area that has been impacted by a disaster, you might be worried about access to care and medicine. Here's what you need to know.
-
Older Investors: Boost Your Savings and Retire EarlierThis one measure can help older investors retire up to two years earlier and potentially double their retirement savings.
-
Nasdaq Ends the Week at a New High: Stock Market TodayThe S&P 500 came within a hair of a new high, while the Dow Jones Industrial Average still has yet to hit a fresh peak in 2025.
-
Stocks Swing Lower as Eli Lilly, Fortinet Spiral: Stock Market TodayThe main indexes finished well off their session highs after a disappointing batch of corporate earnings reports.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
Stocks Rally on Apple Strength: Stock Market TodayThe iPhone maker will boost its U.S. investment by $100 billion, which sent the Dow Jones stock soaring.
-
Rally Pauses for Hot Earnings, Cool Data: Stock Market TodayMarkets were mostly mixed Tuesday after decisive moves Friday and Monday.
-
Dow Rises 585 Points on Rate Cut Hope: Stock Market TodayStocks moved more than 1% again Monday, this time to the upside following the Jobs Friday sell-off.
-
How Big Will the Fed Rate Cut Be This Fall?A dismal July jobs report has lifted expectations for fall rate cuts. How low could the fed funds rate be by year's end?
-
Dow Dives 542 Points on Soft Jobs Data: Stock Market TodayThe last day of a busy week ends with the first greater-than-1% move in either direction in more than a month.
