Market Volatility Continues as Investors Digest Earnings and Economic Data
The US stock market experienced a rollercoaster ride on Thursday, with major indexes struggling to build on the previous day’s surge. The S&P 500 fell about 0.2%, while the Dow Jones Industrial Average slipped more than 0.1%. The tech-heavy Nasdaq Composite led the way down, falling almost 0.9%.
Earnings Season Kicks into High Gear
Bank of America’s fourth-quarter profit more than doubled, driven by a Wall Street dealmaking revival that has also boosted earnings at its rivals. Morgan Stanley’s stock rose more than 4% after it posted a surge in quarterly profit. However, UnitedHealth’s fourth-quarter revenue fell short of estimates, dented by weakness in its health insurance unit.
Investor Sentiment Shifts
According to the latest AAII Investor Sentiment Survey, investor sentiment is now the least bullish it has been since November 2023. Just 25.4% of respondents said they were bullish, while 40.6% voted bearish. This shift in sentiment comes after an overarching bullish vibe to end 2024.
Inflation Concerns Linger
Despite a surprise easing in consumer inflation, fears over sticky prices remain. Economists agree that the fight to curb inflation is far from over. Higher costs for shelter and core services like medical care and insurance have contributed to stubborn readings in recent months.
Gold Rises on Rate Cut Hopes
Gold jumped to its highest level in a month on Thursday as traders reassessed the amount of rate cuts the Federal Reserve could implement this year. Bullion futures rose more than 1%, trading above $2,740 per ounce.
Retail Sales Disappoint
Retail sales grew at a slower pace than expected in December, rising 0.4% versus expectations of 0.6%. Meanwhile, retail sales in November were revised up to 0.8% from a prior reading that showed a 0.7% increase in the month.
Treasury Secretary Nominee Faces Senate Confirmation Hearing
Scott Bessent, President-elect Donald Trump’s nominee for Treasury Secretary, faced a Senate confirmation hearing on Thursday. Bessent expressed support for tougher sanctions against Moscow to end the Ukraine war and highlighted the need for the government to ensure the US Dollar remains the world’s reserve currency.
Homebuilders’ Optimism Grows
Despite elevated mortgage rates, builders are starting the year with more optimism than at the end of 2024. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose to 47 in January, up one point from December and higher than economists’ estimates of 45.
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