us stocks ended sharply higher on tuesday to close out a strong first month of the year as investors evaluated a continued flurry of corporate earnings and economic data while awaiting the federal reserves first interest rate decision of 2023 the nasdaq composite cemented its best january performance since it notched a 122 gain in 2001 while the sp 500 booked its best start to a year since 2019 according to dow jones market data the sp 500 gained 62 this month while the dow booked a monthly gain of 28 and the nasdaq jumped 107 in january according to dow jones market data the federal open market committee kicked off its twoday meeting on tuesday with near universal expectations for a quarter percentage point interestrate hike with the uncertainty focused on the commentary to be delivered in the statement and the news conference with chair jerome powell melissa brown managing director of applied research at qontigo said the 25 basis point increase is baked in already but what the policy makers say about what they will do for the rest of the year is whats going to be important that expectation of a rate cut later in the year has really been one of the driving forces behind the market strength brown told marketwatch via phone if they fed officials say theyre not going to do that that could be a negative for the market on the other hand if they confirm that theyre going to do that im not sure thatll have a big impact because its already built into market expectations traders now place a 54 probability that the central bank would pause rate increases by midyear after raising it to a range of 475 to 5 according to the cmes fedwatch tool read4 ways powell could tell markets the fed isnt ready to pivot investors have to weigh potential fed moves along with the slew of fourth quarter earnings reports and 2023 outlooks from major businesses before the bell exxon mobil xom pfizer pfe caterpillar cat general motors gm and mcdonalds mcd reported earnings meanwhile tuesdays us economic data calendar included the employment cost index eci which showed a 1 increase for the fourth quarter less than expected and a 51 increase for 2022 up from 50 in other data us home prices fell for a fifth straight month in november the sp corelogic caseshiller 20city price index showed tuesday while consumer confidence slipped in january us stocks are rallying after some standout earnings and economic data that suggests disinflation trends should remain in place for a while said edward moya senior market analyst at oanda wall street is slowly growing confident that this weeks fed rate hike might end up being the last one in this tightening cycle see us stock market hits the january indicator trifecta but can the rally last for the rest of 2023