An encouraging reading on retail sales sent stocks higher to start Thursday. While the rally ran out of steam shortly after lunchtime, a late-afternoon push higher had the main indexes adding to Wednesday's Fed-induced gains.
Yesterday, the Nasdaq Composite, S&P 500 and Dow Jones Industrial Average each jumped 1.4%, with the blue-chip Dow closing at a new all-time high. The bullish price action was fueled by the Federal Reserve's forecast for three rate cuts for next year.
Today, the Dow carved out another new high, rising 0.4% to 37,248. The Nasdaq (+0.2% at 14,761) and the S&P 500 (+0.3% at 4,719) finished with more modest gains.
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Notably, small-cap stocks – which lag the major indexes on a year-to-date basis – outperformed, with the Russell 2000 index jumping 2.7% to 2,000.
"It's only natural that smaller companies, which tend to require more access to capital markets and have brittler balance sheets, suffered more than their larger peers when the Fed's most aggressive tightening campaign in four decades left interest rates at a 22-year high," writes Dan Burrows, senior investing writer for Kiplinger.com, wrote in his updated piece on the best small-cap stocks to buy. But the "Federal Reserve's pivot to rate cuts in 2024 is just what beleaguered small caps needed."
Retail sales unexpectedly rise in November
Retail sales headlined Thursday's economic calendar. Data from the Census Bureau showed retail sales rose 0.3% in November – an improvement over October's downwardly revised 0.2% decline. Economists, for their part, were anticipating a 0.1% decline in retail sales.
"Today's data suggests the U.S. economy – especially the consumer – is still chugging along," says Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley. "The risk going forward is that too much economic heat could reignite inflation and put the Fed back in a defensive posture. For now, though, the 'soft-ish' landing scenario remains in place."
Buffett boosts Occidental Petroleum stake
In single-stock news, Occidental Petroleum (OXY) popped 2.7% after a regulatory filing revealed Warren Buffett's Berkshire Hathaway (BRK.B, -1.1%) bought about 10.5 million OXY shares between December 11 and December 13.
Buffett & Co. first started accumulating shares of the oil stock in the first quarter of 2022. At the end of Q3 2023, the holding company owned more than 224 million Occidental shares, accounting for 4.6% of the Berkshire Hathaway equity portfolio.
Intel stock pops on AI chip news
Elsewhere, Intel (INTC) rose 1.4% after the company unveiled new chips that will allow for easier use of artificial intelligence (AI) applications on personal computers.
"AI innovation is poised to raise the digital economy's impact up to as much as one-third of global gross domestic product1," Intel CEO Pat Gelsinger said in the press release. "Intel is developing the technologies and solutions that empower customers to seamlessly integrate and effectively run AI in all their applications – in the cloud and, increasingly, locally at the PC and edge, where data is generated and used."
INTC has been one of the best Dow Jones stocks so far this year, but it remains a big disappointment for long-term investors.
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