Markets Take a Breather

U.S. stocks ended slightly lower after posting their largest daily gain since November 6. The rally followed cooling inflation data and strong bank earnings.

Investors largely brushed off weaker-than-expected December retail sales and a surprising rise in weekly unemployment claims.

The Commerce Department reported December retail sales rose by 0.4%, missing forecasts of a 0.6% increase. Weekly jobless claims climbed by 14,000 to 217,000, higher than the predicted 210,000.

The S&P 500 dropped 0.21% to 5,937.34, the Dow Jones Industrial Average fell 0.16% to 43,153.13, and the Nasdaq declined 0.89% to 19,338.29.

Bond yields also shifted. The benchmark 10-year yield eased to 4.615% after Federal Reserve officials suggested potential rate cuts later in the year. This followed a strong jobs report that prompted some economists to scale back rate-cut expectations.

Banks Lead on Earnings

Bank stocks extended their gains with positive earnings reports boosting investor confidence.

Bank of America and Morgan Stanley both exceeded analysts’ forecasts for fourth-quarter earnings, aided by robust investment banking performance. This followed strong results earlier in the week from JPMorgan, Goldman Sachs, Wells Fargo, and Citigroup.

Strong bank earnings have reassured investors about companies’ ability to handle higher interest rates, according to Samer Hasn, a senior analyst at XS.com.

Key Stock Movements

• UnitedHealthcare shares dropped after missing quarterly revenue expectations in its first earnings report since the death of executive Brian Thompson.
• TSMC reported record profits driven by AI demand, boosting shares of Nvidia and Broadcom as well.
• BP shares edged higher after announcing plans to cut 4,700 internal roles and 3,000 contractor positions.
• Target shares slipped despite raising fourth-quarter sales guidance, as concerns over profit margins lingered.
• American Express fell slightly after agreeing to pay $230 million in penalties over deceptive sales practices targeting small-business customers.

Treasury Secretary Nominee Faces Questions

Scott Bessent, President-elect Donald Trump’s nominee for Treasury secretary, faced Senate scrutiny. He expressed support for tariffs, tax cuts, increased sanctions on Russian oil, and the Federal Reserve’s policy independence. Bessent also dismissed the need for a central bank digital currency, favoring the traditional U.S. dollar.

Bitcoin Breaks Key Milestone

Bitcoin surpassed $100,000, fueled by reports of Trump considering a cryptocurrency reserve. However, it slipped into negative territory by the close of trading, ending at $100,184.70, down 0.25%. Reports suggest the potential reserve could expand to include other cryptocurrencies like Solana and XRP.