(New throughout, updates prices, market activity and comments to end of trading session)
Retail sales up 3% in Jan vs. est. of 1.8% rise
TSM slides as Berkshire Hathaway chops stake
Devon Energy drops on profit miss
By Johann M Cherian and Noel Randewich
Feb 15 (Reuters) – The S&P 500 ended higher on Wednesday after stronger-than-expected retail sales data offered evidence of resilience in the U.S. economy, but gains were capped as investors worried about more interest rate hikes by Federal Reserve in the months ahead.
A Commerce Department report showed retail sales surged 3% in January as purchases of motor vehicles and other goods pushed the number well past the 1.8% estimate from economists polled by Reuters.
On Tuesday, data showed U.S. consumer prices accelerated in January, boosting expectations that the Fed will raise the policy rate at least twice more this year to the 5-5.25% range.
“The good news from retail, and broadly from the stronger economy, has been mostly priced in,” said Ross Mayfield, an investment strategist at Baird in Louisville, Kentucky. “At the same time, that strength has taken market expectations of rate cuts off the table and moved the terminal Fed funds rate a little bit higher.”
Fueled by a rebound in growth stocks that were hammered in last year’s stock market downturn, the S&P 500 has climbed almost 8% so far in 2023. A better-than-expected quarterly earnings season has provided cautious optimism.
More than half of all S&P 500 companies have reported quarterly earnings, and nearly 70% of those have topped profit expectations, according to I/B/E/S data from Refinitiv. That compares to a long-term average of 66%.
According to preliminary data, the S&P 500 gained 11.35 points, or 0.27%, to end at 4,147.48 points, while the Nasdaq Composite gained 110.34 points, or 0.92%, to 12,070.15. The Dow Jones Industrial Average rose 35.09 points, or 0.10%, to 34,124.36.
Roblox soared after the gaming platform popular with kids topped quarterly bookings estimates.
U.S.-listed shares of Taiwan Semiconductor Manufacturing Co (TSMC) fell after Warren Buffett’s Berkshire Hathaway Inc slashed its stake in the chipmaker.
Shares of Airbnb Inc and Tripadvisor Inc rose after the companies posted forecast-beating results due to strong travel demand.
Devon Energy slumped after the shale oil producer missed expectations for quarterly profit due to a hit to production from severe cold weather in the United States and higher expenses.
Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru and by Noel Randewich in Oakland, Calif., additional reporting by Shristi Achar A; Editing by Savio D’Souza, Anil D’Silva and David Gregorio