Stocks closed slightly higher on Wednesday as market participants reacted to stronger-than-expected January retail sales and their implications when it comes to the Federal Reserve's interest rate hiking campaign. The Dow Jones Industrial Average added about 40 points, while the S&P 500 Index and Nasdaq Composite were 0.3% and 0.9% higher, respectively.

Here's how the market settled on Wednesday:

S&P 500 Index (SPY  ): +0.28% or +11.48 points to 4,147.61

Dow Jones Industrial Average (DIA  ): +0.11% or +39.07 points to 34,128.34

Nasdaq Composite Index (QQQ  ): +0.92% or +110.45 points to 12,070.59

Driving market moves Wednesday, U.S. retail sales topped expectations for January, rising 3% for the month, compared to estimates of a 1.9% gain, the Commerce Department reported Wednesday. Excluding auto sales, retail sales rose 2.3%, above estimates for a gain of 0.9%.

In other economic news, homebuilder sentiment for U.S. single-family homes rose in February to a reading of 42, according to the National Association of Home Builders/Wells Fargo Housing Market Index. This is the index's higher reading since September and the largest monthly gain since June 2013. Still, readings below the neutral level of 50 are considered negative.

"With the largest monthly increase for builder sentiment since June 2013, the HMI indicates that incremental gains for housing affordability have the ability to price-in buyers to the market," said NAHB Chairman Alicia Huey in a statement. "The nation continues to face a sizeable housing shortage that can only be closed by building more affordable, attainable housing."

On the earnings front, Roblox (RBLX  ) shares popped after the company reported $899.4 million in fourth-quarter bookings, surpassing analyst estimates. Roblox reported 58.8 million average daily active users, up 19% year-over-year, and users spend more than 12.8 billion hours on the platform in the fourth-quarter, up 18%.

Airbnb (ABNB  ) shares rose after the lodging company reported record fourth-quarter sales and posted its first profitable year in 2022. In its shareholder letter, Airbnb said it's seeing continued strong demand at the start of 2023. The company said revenue in the first quarter will be between $1.75 billion and $1.82 billion, which is above current estimates.

In other stock news, shares of Tesla (TSLA  ) rose after CEO Elon Musk said he plans to appoint a new CEO of Twitter (which he is currently CEO of) by the end of the year. "I need to stabilize the organization and just make sure it's in a financially healthy place and the product road map is clearly laid out," Musk said in remarks before the World Government Summit in Dubai on Wednesday, quoted by Bloomberg.

Wednesday's moves come after a volatile session on Tuesday that saw all three major averages end the day flat after January's surprise CPI report. The month's CPI rose 0.5% month-to-month and 6.4% on an annual basis, while Core CPI (which excludes food and energy prices) climbed 0.4% and 5.6%, respectively.

Looking ahead, investors will continue to watch earnings reports, with readings from Zillow (ZG  ), Shopify (SHOP  ) and DoorDash (DASH  ) set to report this week.