Stock market today: Dow ends higher on dip-buying in tech ahead of inflation data

By Yasin Ebrahim

Investing.com -- The Dow rallied to close higher Monday, as dip-buying investors piled into beaten-down tech stocks just a day ahead of the inflation report that some expect could surprise to the upside and encourage the Federal Reserve to remain committed to further rate hikes.

The Dow Jones Industrial Average gained 1% or 377 points, the S&P 500 rose 1.1%, and the Nasdaq jumped 1.5%.

Meta and Microsoft (NASDAQ:MSFT) attracted the bulk of dip-buying in tech following a rough ride for the sector last week when sentiment was hurt by rising yields as investors priced in a more aggressive Federal Reserve.

Meta Platforms (NASDAQ:META) jumped more than 3% in a further sign that the social media company is making good on its promise to usher in a ‘Year of Efficiency,’ as reports suggest that the company is eyeing more job cuts just months after laying off 11,000 employees.

The rebound in tech comes just a day ahead of the inflation report that many fear could show a reacceleration in price pressures following an upward revision to the December report.

“I think a lot of the Street is actually revising up slightly their expectations for tomorrow's CPI number,” Matt Kennedy, portfolio manager at Angel Oak Capital Advisors told Investing.com’s Yasin Ebrahim on Tuesday. "There were some revisions to the categories and the historical numbers from a seasonal standpoint for inflation that'll be incorporated into the report,” Kennedy added.

Ahead of the inflation report, the consumer price index for December was revised higher to show a 0.1% rise rather than a 0.1% drop as reported last month, the Labor Department reported Friday.

On the earnings front, meanwhile, Fidelity National Information Services Inc (NYSE:FIS) reported quarterly results that marginally beat Wall Street expectations, but weaker guidance amid concerns about slowing growth. Its shares fell 12%, but some backed the stock, citing valuation.

The softer-than-expected annual guidance for 2023 is “factoring a persistent, recessionary environment throughout CY23, which we believe, reflects a ‘worse case’ scenario outlook,” Wedbush said, reiterating its Outperform rating on the stock.

“FIS' valuation remains ‘dislocated’ relative to the company's "normalized" growth rate and historical valuation multiples,” it added.

Energy was the sole sector in the red, as oil prices gave up gains as Russia's plans to cut production continues to weigh on sentiment.

Still, many continue to bet that crude prices will creep higher, supported by an improving backdrop for energy demand from China, the world’s largest oil importer.

“Following the news from Russia that oil production will likely decline in March, we are seeing more investors agreeing with our view that the Brent range will likely be $80-$100/b over the next several years. The key catalyst many believe to firm oil prices further will be China demand improvement,” Goldman Sachs said in a note.