Stocks turned lower Thursday, following the best day for the S&P 500 since the November election, as investors reset bets that slowing inflation and a solid domestic economy would continue to drive stocks higher into the new year.
The Dow Jones Industrial Average fell 68.42 points, or 0.16%, to end the session at 43,153.13, while the S&P 500 slid 0.21% to close 5,937.34 and the tech-heavy Nasdaq lost 0.89% to end the day at 19,338.29, as Apple, Tesla, Nvidia and Alphabet all finishing in the red.
Bill Adams, chief economist for Comerica Bank, said that the December retail sales report points to tailwinds for the first estimate of GDP from consumer spending.
He noted that control retail sales, which feeds into the calculation of nominal GDP, rose 5.4% annualized in the fourth quarter.
"The U.S. consumer continues to propel the economy forward," he said. "Low and moderate income households are still under pressure from recent years’ big increases in the cost of living, but more affluent Americans are spending openhandedly and propelled economic growth last year."
Adams said that consumer spending should be a big tailwind to economic growth in 2025 as well.
"Incomes outpaced inflation in 2024, which should ease financial pressures on low- and moderate-income households," he said.
"And the robust increase of household net worth and improving animal spirits should fuel discretionary spending growth by more affluent households on durable goods and high-end categories," Adams added.
Updated at 12:06 PM EST
Secretary of Debt?
Scott Bessent, President-elect Donald Trump's choice for Treasury Secretary, defended the need to extend the 2018 tax cuts by telling lawmakers on the Senate Banking Committee that the economy faces a 'calamity' if they're repealed.
He also said the Treasury would be "hard pressed" to respond to a national economic emergency given the current record levels of U.S. debt, which are on pace to top $40 trillion early next month, and the surging levels of deficit spending.
I am concerned because several times the Treasury of the United States has been called upon to save the nation," Bessent said. "Whether it was the Civil War, the Great Depression, World War II or the recent Covid epidemic, Treasury, along with the whole of government and Congress, has used its borrowing capacity to save the union, save the world, and save the American people. What we currently have now, we would be hard-pressed to do the same.”
I'm watching Scott Bessent testify at the Senate confirmation hearing for his nomination as the next Secretary of the Treasury. As I've said, the job title should be Secretary of the Debt, as the Treasury is bare.
— Peter Schiff (@PeterSchiff) January 16, 2025
Updated at 10:37 AM EST
Turning lower
Stocks are moving lower following an early opening bell gain, with the S&P 500 down 6 points on the session and the Nasdaq falling 57 points.
Curiously, Treasury yields are moving in the same direction despite the solid December retail sales figures, with benchmark 10-year notes last pegged at 4.641%.
This is SPX 500's earning's yield (using negative P/E as proxy, same chart), versus bond yield. You can see we're in a weird period where bond yield is rising while equity yield is collapsing.
— WallStInternCoach (@WSTInternCoach) January 16, 2025
History would suggest one of them is wrong.
I can see why Buffett holds cash. pic.twitter.com/qJrm6yZQp1
Updated at 9:38 AM EST
Modest green
The S&P 500 was marked 11 points, or 0.19% higher in the opening minutes of trading, with the Nasdaq edging 20 points or 0.1% into the green.
The Dow was able to gain 35 points despite the pulldown from UnitedHealth, while the mid-cap Russell 2000 gained 4 points, or 0.16%.
S&P 500 Opening Bell Heatmap (Jan 16, 2025)$SPY +0.21% 🟩$QQQ +0.39% 🟩$DJI flat ⬜$IWM flat ⬜ pic.twitter.com/zkV2BMxbch
— Wall St Engine (@wallstengine) January 16, 2025
Updated at 9:22 AM EST
UnitedHealth slide
UnitedHealth Group (UNH) shares are set to slide deeper into correction territory after the health insurance giant posted weaker-than-expected fourth quarter revenues amid rising medical costs that continue to eat into its bottom line.
The group, which lost its UnitedHealth division CEO to a brutal murder in Manhattan last month, reiterated its full-year profit forecast while addressing the ongoing debate over the role of Pharmacy Benefit Managers (PBMs) in the U.S. healthcare system.
"There are participants in this business that benefit from high prices," CEO Andrew Witty told investors on a conference call. "American consumers pay disproportionally more (for some drugs such as GLP-1s) than people from other countries. PBMs play a vital role in holding those prices down."
UnitedHealth shares, a Dow component, were last marked 2.3% lower in premarket trading to indicate an opening bell price of $531.00 each.
Related: UnitedHealth stock slides as earnings highlight health insurance challenge
Updated at 8:51 AM EST
Still spending
U.S. retail sales faded over the final month of the year, data indicated Thursday, but a key reading on spending that feeds into economic growth figures powered higher, adding further complexity to inflation forecasts heading into 2025.
Headline sales rose 0.4% in December to a collective tally of $729.2 billion, the Commerce Department said, just inside Wall Street's consensus forecast of a 0.6% gain. The November reading was revised higher, to a gain of 0.8%.
The closely tracked control group number, which excludes autos, building materials, office supplies, gas-station sales and tobacco, and feeds into the government's GDP calculations, rose 0.7% on the month, topping the Wall Street consensus forecast of 0.4% and November's gain of 0.4%.
Separate data from the Labor Department showed that around 217,000 Americans filed for first-time unemployment benefits last week, an increase of around 14,000 from the prior period.
Still, the four-week average slipped to 212,750, suggesting the labor market held its early-year momentum over the second week of January.
Retail Sales YoY 3.9%, best in a year pic.twitter.com/H2Qxgr6sHj
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) January 16, 2025
Updated at 7:16 AM EST
America's bank
Bank of America (BAC) followed its Wall Street rivals by riding a rebound in fourth-quarter dealmaking to boost its overall profits.
The lender posted better-than-expected earnings of 82 cents a share, with investment banking revenue rising 44% to $1.7 billion
"Every source of revenue increased, and we saw better than industry growth in deposits and loans," CEO Brian Moynihan said. "This broad momentum sets up 2025 very well."
Bank of America shares were marked 1% higher in premarket trading to indicate an opening-bell price of $47.55 each.
BREAKING: $BAC reports Q4 2024 financial results. https://t.co/A1zKBXkNxP pic.twitter.com/8k51yWCi4x
— Bank of America (@BankofAmerica) January 16, 2025
Updated at 6:40 AM EST
Beyond Target
Target (TGT) shares jumped higher after the retailer posted early holiday-quarter sales data that firmly topped Wall Street forecasts.
Same-store sales were up 1.5% over the three months ended in December, well ahead of Wall Street's 0.2% estimate, with combined sales over the final two months rising 2%. Sales over the Black Friday and Cyber Monday periods touched records.
The group also estimated adjusted earnings of between $8.30 and $8.90 a share with overall revenue rising 2% from the year-earlier period.
"Our team delivered continued traffic growth and better-than-expected holiday-season performance, thanks to their focus on serving guests with an inspiring, easy, and joyous shopping experience," said CEO Brian Cornell.
Target shares were marked 4.8% higher in premarket trading to indicate an opening bell price of $141.02 each.
$TGT | Target Sees Q4 Comp sales +1.5% Saw 0% (est 0.18%)
— LiveSquawk (@LiveSquawk) January 16, 2025
- Still Sees Q4 Adj EPS 1.85 To $2.45 (est $2.19)
- Still Sees Fy Adj Eps $8.30 To $8.90 (est $8.67)
Stock Market Today
The S&P 500 rose 1.83% in a torrid session on Wednesday, with the Dow Jones Industrial Average rising more than 700 points, following the first pullback in core inflation in more than six months paired with better-than-expected fourth-quarter earnings from the country's biggest banks.
The December inflation report, which included modest upticks in headline pressures but muted readings in core prices, lopped more than 10 basis points from benchmark 10-year Treasury bond yields and reignited bets on a second Federal Reserve rate cut before the end of the year.
The paper was last marked steady at 4.657%, with 2-year notes trading at 4.257%, heading into another busy calendar with jobless claims and December retail sales data due at 8:30 a.m. Eastern time.
The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, was also holding steady at 109.081 after falling around 0.6% over the whole of the Wednesday session.
Related: Inflation data tames key headwind for S&P 500, Fed interest rate cuts
Wall Street is also likely to focus on the confirmation hearing for President-elect Donald Trump's choice for U.S. treasury secretary, Scott Bessent, who faces the Senate Finance Committee at 10:30 a.m. Eastern Time.
Bessent, a former hedge fund manager, said in prepared remarks released last night that it was "critical (to) ensure that the U.S. dollar remains the world's reserve currency."
Heading into the start of the trading day, futures contracts tied to the S&P 500 suggest a 22 point opening bell gain, while those linked to the Dow are priced for a 100 point bump.
The tech-focused Nasdaq is called 110 points higher, with solid early gains for Nvidia (NVDA) and other chipmakers providing and early boost following record profits from Taiwan Semiconductor, the world's biggest chip contractor.
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In Europe, the regionwide Stoxx 600 rose 0.74% in Frankfurt to trade at the highest levels in 5 weeks, powered by chip and luxury goods stocks, while Britain's FTSE 100 was marked 0.77% higher in London.
Overnight in Asia, Wall Street's sharp rally lifted the region-wide MSCI ex-Japan index 1.27% higher into the close of trading, while the Nikkei 225 rose 0.33% on the session in Tokyo.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
