US stocks ended the day lower on Thursday as investors panned over the latest batch of economic data, plus Fedspeak and the start of earnings season for the corporate tech giants.
The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) fell nearly 0.8%. The technology-heavy Nasdaq Composite (^IXIC) declined nearly 1.0%.
Bond prices rose. The benchmark 10-year US Treasury yield rose to 3.397% from 3.368% this morning. The dollar index has declined more than 10% after trading at its 20-year high in late September, according to data from Bespoke Investment Group.
Stocks tumbled on Wednesday after new government data showed a slowdown in consumer spending activity, while a reading on wholesale price inflation showed signs that price pressures are easing in the economy. . The S&P 500 had its worst day on Wednesday since mid-December, failing to hold the 200-day moving average, according to JP Morgan’s US market intelligence team.
Wall Street navigated another round of data and Fedspeak on Thursday. Federal Reserve Vice Chair Lael Brainard said on Thursday the central bank should stay the course in tightening monetary policy “to make sure inflation returns to 2% on a sustained basis.”
Federal Reserve Bank of Boston President Susan Collins said Thursday that she favors a more moderate pace of interest rate hikes ahead of the Fed’s next policy meeting, which begins June 31. January. Later Thursday, New York Fed President John Williams is expected to speak at a separate event.
Other Fed officials on Wednesday called for more interest rate hikes. St. Louis Fed President James Bullard said policymakers should move interest rates above 5% “as fast as we can” before stopping the current hike cycle.
Turning to economic data, US new home construction continued to fall in December, the fourth straight monthly decline, capping out a disappointing year for the industry.
Residential starts decreased 1.4% last month to 1,382 million annualized rate, according to government data released Thursday. Construction of single-family homes jumped to an annualized rate of 909,000. Economists polled by Bloomberg called for a pace of 1.36 million total residential starts in December.
Building applications, an indicator of future construction, decreased 1.6% to 1.33 million annualized units. Permits for the construction of single-family homes fell 6.5%.
Initial jobless claims fell to 190,000 from 205,000 the week before. Applications were expected to rise to 214,000, according to Bloomberg estimates.
Meanwhile, the Philadelphia Fed’s manufacturing index improved modestly in January to -8.9 from -13.8 in December. This reading came out better than the forecast of -10.3.
Investors are beginning to enter what is likely to be a challenging fourth-quarter earnings season, and analysts are revising their earnings growth forecasts lower. According to data from FactSet Research, the consensus for the earnings decline is 3.9%, which would mark the first year-over-year earnings decline reported by the index since 2020 if it comes to fruition.
DataTrek’s Nicholas Colas points out that the power of corporate earnings remains a question mark. Fourth-quarter earnings should provide some insight, but management feedback on this year’s fundamentals will be more important. The problem, in Colas’s view, is that no CEO has an incentive to be optimistic right now.
Netflix (NFLX) took center stage when it reported earnings on Thursday after the market closed, kicking off a two-week period during which most of the biggest tech companies in the market will report their quarterly results.
The streaming giant’s co-founder, Reed Hastings, said he would transition from co-CEO to CEO, while naming a new co-CEO, current COO Greg Peters, along with Ted Sarandos.
Netflix beat its subscriber forecasts in the last quarter, adding nearly 7.7 million new customers. The firm had previously expected to add 4.5 million during the period. Shares were up 3% after the close.
In other specific market moves, Alcoa (AA) shares fell on Thursday after the US-based aluminum producer reported lower prices for aluminum products at the end of 2022.
Procter & Gamble (PG) shares fell 2% on Thursday after the company raised its full-year sales forecast on price increases to cover transportation, commodity, labor and cost costs. impact of a strong US dollar affecting your earnings abroad.
Amazon (AMZN) shares fell nearly 2% as the company said it would shut down its AmazonSmile charitable giving program. The decision to end the decade-long program is the latest aimed at cutting costs at the company.
In commodity markets, the West Texas Intermediate (WTI), the US benchmark index, rose more than 1% to $80 a barrel. At the same time, gasoline prices have risen 5.33% since the end of 2022, according to AAA data.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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