The first half of Thursday resembled Wednesday for investors. The Dow Jones Industrial Average again outperformed its peers, driven by a solid earnings reaction from Salesforce. Meanwhile, the S&P 500 and Nasdaq Composite lagged, as Treasury yields remained elevated, and shares of Tesla faced a sell-off following the company’s Investor Day. However, all three benchmarks experienced gains in late-afternoon trading thanks to some dovish comments from the Federal Reserve.
Salesforce emerged as the standout among the Dow stocks, soaring 11.5% after the software-as-a-service (SaaS) company reported impressive earnings. In its fourth quarter, revenue surged 14% year-over-year to $8.4 billion, while earnings per share doubled to $1.68, both figures surpassing estimates. Furthermore, Salesforce provided higher-than-expected guidance for the current quarter and full year.
In contrast, Tesla shares fell 5.9% after unveiling its “Master Plan 3” during Investor Day. The company detailed plans to eliminate reliance on fossil fuels by “improving the energy density of batteries” and achieving a fully electric transportation ecosystem, according to CEO Elon Musk. Tesla is also reassessing its manufacturing approach, which could lead to a 30% improvement in efficiency.
Market Performance
While the major indexes fluctuated throughout the day, comments from Atlanta Fed President Raphael Bostic in the afternoon shifted investor sentiment. Bostic’s stance on a potential quarter-point interest rate increase for the next Fed meeting contributed to positive closing numbers: the Nasdaq finished up 0.7% at 11,462, the S&P 500 rose 0.8% to 3,981, and the Dow gained 1.1% to reach 33,003.
Understanding Economic Data
It wasn’t solely individual stock movements and central bank news that influenced the market this week. Recent economic data shows a surprising decline in weekly jobless claims, with a drop of 2,000 to 190,000. Additionally, the Labor Department revised fourth-quarter unit labor cost growth, a key inflation indicator, to 3.2% from the previously reported 1.1%.
“Economic data remains central to the investor narrative for March,” noted Greg Bassuk, CEO at AXS Investments. “As we saw declines triggered by the strong January jobs report and other growth metrics, both Wall Street and Main Street are keenly awaiting forthcoming economic data to interpret job market trends and inflation, which will guide Fed actions throughout 2023.” Without signs of economic data weakening, Bassuk warns, “stocks may face an intensified pullback in March.”
Strategies for Volatile Markets
Fortunately, low-volatility strategies provide investors a means to hedge their portfolios amid potential market downturns. These strategies could involve investing in low-volatility stocks or low-volatility exchange-traded funds (ETFs), which can help mitigate risks during periods of instability.
