Stock Market Update

[BRIEFING.COM] Today's trade was mixed following yesterday's CPI-induced surge. The Nasdaq Composite underperformed its peers, dropping 0.9%, while the Dow Jones Industrial Average (-0.2%) and S&P 500 (-0.2%) traded around their prior closing levels. The Russell 2000 eked out a 0.2% gain. 

There was a big batch of economic data, earnings news, and headlines to digest today and most of them could've acted as support for the stock market. Retail sales and weekly jobless claims reflected ongoing strength in the economy and labor market, Treasury Secretary nominee Scott Bessent reiterated at his confirmation hearing that the U.S. must get its fiscal house in order while also pursuing pro-growth policies, and Fed Governor Waller (FOMC voter) said he believes that there could possibly be 3-4 rate cuts this year, depending on the data.

Treasury yields declined after Fed Governor Waller's remarks. The 10-yr yield settled five basis points lower at 4.61% and the 2-yr yield settled two basis points lower at 4.24%.

Equities still struggled, though, due to technical resistance after the S&P 500 could not maintain a posture above its 50-day moving average (5,962) and due to losses in influential names. Apple (AAPL 228.26, -9.61, -4.0%), NVIDIA (NVDA 133.57, -2.67, -2.0%), Tesla (TSLA 413.82, -14.40, -3.4%), Amazon.com (AMZN 220.66, -2.69, -1.2%), Meta Platforms (META 611.30, -5.82, -0.9%), and Microsoft (MSFT 424.58, -1.73, -0.4%) were among the standouts in that respect. 

Some companies that reported earnings traded lower despite better-than-expected results. Bank of America (BAC 46.64, -0.46, -1.0%) and US Bancorp (USB 48.03, -2.87, -5.6%) were among them while Morgan Stanley (MS 135.81, +5.26, +4.0%) hit a fresh 52-week high in response to earnings. 

Dow component UnitedHealth (UNH 510.59, -32.83, -6.0%) was another name that reported results, stumbling after reporting Q4 and year-end results that featured a higher medical care ratio.

Losses in some of the aforementioned names weighed down the S&P 500 information technology (-1.3%), communication services (-1.0%), and consumer discretionary (-0.9%) sectors while the remaining eight sectors registered gains ranging from 0.4% (health care) to 2.6% (utilities). 

• S&P Midcap 400: +3.4% YTD
• Russell 2000: +1.6% YTD
• Dow Jones Industrial Average: +1.4% YTD
• S&P 500: +1.0% YTD
• Nasdaq Composite: +0.1% YTD

Reviewing today's economic data:

• December Retail Sales 0.4% (Briefing.com consensus 0.5%); Prior was revised to 0.8% from 0.7%, December Retail Sales ex-auto 0.4% (Briefing.com consensus 0.5%); Prior 0.2%
  • The key takeaway from the report is that retail sales, which are not adjusted for price changes, were more subdued than expected in December, suggesting consumers spent in a more considerate manner. Importantly, though, they remained inclined to spend.
• Weekly Initial Claims 217K (Briefing.com consensus 212K); Prior was revised to 203K from 201K, Weekly Continuing Claims 1.859 mln; Prior was revised to 1.877 mln from 1.867 mln
  • The key takeaway from the report is that there was nothing disruptive about it in terms of the market's understanding that the labor market, overall, continues to be in pretty good shape.
• January Philadelphia Fed Index 44.3 (Briefing.com consensus -6.0); Prior was revised to -10.9 from -16.4
• December Export Prices 0.3%; Prior 0.0%
• December Export Prices ex-ag. 0.3%; Prior was revised to 0.0% from 0.1%
• December Import Prices 0.1%; Prior 0.1%
• December Import Prices ex-oil 0.1%; Prior was revised to 0.1% from 0.0%
• November Business Inventories 0.1% (Briefing.com consensus 0.1%); Prior was revised to 0.0% from 0.1%
• January NAHB Housing Market Index 47 (Briefing.com consensus 45); Prior 46

Looking ahead to Friday, market participants receive the following economic data:

• 8:30 ET: December Housing Starts (Briefing.com consensus 1.318 mln; prior 1.289 mln), Building Permits (Briefing.com consensus 1.454 mln; prior 1.505 mln)
• 9:15 ET: December Industrial Production (Briefing.com consensus 0.3%; prior -0.1%) and Capacity Utilization (Briefing.com consensus 77.0%; prior 76.8%)
• 16:00 ET: November Long-Term TIC Flows (prior $152.3 bln)