U.S. stocks showed little movement on Thursday, halting after a robust rally earlier in the week—the largest since November 6. Strong bank earnings and cooling inflation initially fueled optimism, but disappointing retail sales and rising jobless claims tempered enthusiasm.
Investors largely overlooked disappointing December retail sales growth and an unexpected rise in weekly jobless claims. The Commerce Department reported a 0.4% increase in retail sales, below economists’ 0.6% prediction. Meanwhile, weekly unemployment claims climbed to 217,000, surpassing the 210,000 forecast.
The S&P 500 dipped 0.21% to 5,937.34, the Dow Jones Industrial Average fell 0.16% to 43,153.13, and the Nasdaq dropped 0.89% to 19,338.29. In bond markets, the 10-year Treasury yield eased to 4.615% after Federal Reserve officials suggested additional rate cuts could occur this year.
Economists adjusted rate expectations after last week’s strong jobs report. Bank of America stated the rate-cutting cycle might have ended, with potential risks of a rate hike instead.
Banks Continue to Shine
Bank stocks extended their rally as impressive earnings reports fueled optimism.
Bank of America and Morgan Stanley exceeded analysts’ fourth-quarter earnings expectations, aided by investment banking performance. These results followed strong reports from JP Morgan, Goldman Sachs, Wells Fargo, and Citigroup earlier in the week.
Samer Hasn, a senior market analyst at XS.com, noted that solid earnings reflect companies’ resilience in adapting to higher interest rates.
Key Stocks to Watch
Several individual stocks made headlines:
- UnitedHealthcare: Shares fell after missing quarterly revenue estimates, marking the first earnings report since the death of executive Brian Thompson.
- TSMC: The semiconductor company posted record earnings, driven by AI demand, and expects growth to persist. Shares surged, boosting semiconductor stocks like Nvidia and Broadcom.
- BP: The oil giant announced plans to cut 7,700 jobs as part of cost-reduction efforts, lifting its shares slightly.
- Target: Despite raising fourth-quarter sales guidance, Target’s shares declined due to concerns about profit margins.
- American Express: Shares slid after the company agreed to pay $230 million in penalties for deceptive practices related to credit card and wire service sales to small businesses.
Trump’s Treasury Pick Faces Questions
Scott Bessent, chosen by President-elect Donald Trump as Treasury secretary, faced Senate scrutiny. He supported tariffs, tax cuts, expanded sanctions on Russian oil, and Federal Reserve policy independence.
Bessent opposed creating a central bank digital currency, expressing preference for the U.S. dollar.
Bitcoin Breaks $100,000 Milestone
Bitcoin surged past $100,000, briefly celebrating a significant milestone before retreating into negative territory. Reports suggested Trump considered a cryptocurrency reserve, possibly including assets like Solana and XRP.
Bitcoin ended the day down 0.25%, closing at $100,184.70. Despite the dip, cryptocurrency remains a focus of investor attention as discussions about broader adoption continue.