Wall Street just heaved a sigh of relief. The U.S. Bureau of Economic Analysis (BEA) on Thursday released the personal consumption expenditures (PCE) index for January and the data met expectations. Let the stock market rally resume!

Two weeks ago, the U.S. Bureau of Labor Statistics (BLS) reported the producer price index (PPI) for January, which showed surprisingly “sticky” inflation. Ever since, investors have been apprehensive about inflation.

By contrast, Thursday’s PCE is welcome news that paves the way for further equity gains. We’re also enjoying a bull market in cryptocurrency; more about crypto’s explosive rise in a minute.

The PCE index edged slightly lower in January, matching consensus expectations. The PCE report brought glad tidings for investors, home buyers, and consumers, because the reading suggests the inflation-fighting Federal Reserve will stick to its moderate stance on monetary policy.

The “core” PCE (excluding volatile food and energy costs), which the Fed watches closely, increased 0.4% for the month and 2.8% from a year ago, as expected in both cases.

Headline PCE increased 0.3% monthly and 2.4% on a 12-month basis, compared to respective estimates for 0.3% and 2.4%.

January’s PCE increase reflected the continuing shift from goods to services, as the economy stabilizes from pandemic-induced disruptions.

The inflation reading came amid an unexpected jump in personal income, which rose 1%, well above the forecast for 0.3%. Spending declined 0.1% versus the estimate for a 0.2% gain.

Wednesday’s data release on the U.S. economy’s performance in the fourth quarter also presented a positive picture.

According to the second estimate from the BEA, the country’s gross domestic product (GDP) in Q4 expanded by 3.2% on a year-over-year basis, slightly below the initial projection of 3.3%. Notably, consumer spending growth, a crucial indicator of economic health, saw an upward revision to 3%.

Despite facing headwinds such as elevated borrowing costs and the lingering effects of last year’s inflationary pressures, consumers have demonstrated remarkable resilience by maintaining robust spending habits. This steadfast consumer activity supports overall economic expansion, which has surpassed expectations. We no longer hear analysts invoking the dreaded “r” word (i.e., recession).

Moreover, the favorable economic trajectory supports a positive outlook for corporate earnings. With nearly 90% of S&P 500 companies having disclosed their operating results, Q4’s earnings growth stands at a strong 7.5%, according to research firm FactSet. This resurgence is particularly driven by the performance of the so-called “Magnificent Seven” stocks and the broader tech sector.

However, the positive earnings momentum is extending beyond tech giants, as cyclical sectors also show signs of profit improvement. After lagging in 2023, small-cap stocks are enjoying a rebound.

This upturn in corporate profits coincides with the Fed’s shift towards an accommodative monetary policy. Rate cuts later this year should further stimulate economic activity, providing a conducive environment for corporate earnings growth across various sectors.

Investors were cheered by the PCE data and the major U.S. equity averages closed higher Thursday as follows:

• DJIA: +0.12%
• S&P 500: +0.52%
• NASDAQ: +0.90%
• Russell 2000: +0.71%

The S&P 500 and tech-heavy NASDAQ closed at new record highs. The four averages ended February with their fourth monthly gain.

To the moon, Alice!

The “blue chip” of crypto, Bitcoin (BTC), continues to soar higher this year and currently hovers at about $61,000, a two-year high.

Bitcoin-linked exchange-traded funds (ETFs) are experiencing record net inflows, as demand for crypto stays red hot (see chart).

To use the lingo of crypto traders, Bitcoin is going “to the moon.” (Of course, Alice Kramden got their first.)

BTC gained 156% in 2023 and it’s showing no signs of slowing down. The whopping increase last year in BTC’s value largely reflected surging demand as crypto investors anticipated the approval and listing of Bitcoin ETFs.

This bullishness has extended throughout the crypto segment and gained steam in recent weeks when the U.S. Securities and Exchange Commission (SEC) finally gave the nod to spot Bitcoin ETFs in January.

The SEC’s decision marks a watershed for crypto, as it increasingly enters the investment mainstream. The gap between traditional and digital markets is narrowing.

Read This Story: Crypto Bulls Unleashed: SEC Approval of Bitcoin ETFs Sparks Frenzy

Every portfolio should have exposure to crypto. As the above chart makes clear, BTC and the broader crypto realm are displaying powerful upward momentum.

But you need to be informed, to make the right choices. Start receiving our FREE e-letter, Crypto Investing Daily. Don’t leave money on the table; get aboard the crypto bonanza. Click here now!

John Persinos is the editorial director of Investing Daily.

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