U.S. stocks ended the day lower Thursday as investors dissected the latest batch of economic data, more Fedspeak, and the start of earnings season from corporate tech giants.
Bond prices ticked up. The yield on the benchmark 10-year U.S. Treasury note rose to 3.397% from 3.368% earlier this morning. The dollar index has declined over 10% after trading at its 20-year high in late September, per Bespoke Investment Group’s data.
Stocks plummeted 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 the US Market Intelligence team at JP Morgan.
Wall Street navigated another round of data and Fedspeak on Thursday. Federal Reserve Vice Chair Lael Brainard said Thursday the central bank should stay the course in making monetary policy more restrictive “to make sure inflation returns to 2% on a sustained basis.”
Federal Reserve Bank of Boston President Susan Collins said on Thursday she favors a more moderate pace of interest-rate increases ahead of the Fed’s next monetary policy meeting, which starts Jan. 31. Later on 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 quickly as we can” before pausing the current hiking cycle.
On the economic data front, new US home construction continued to fall in December, the fourth consecutive monthly decline, closing out a disappointing year for the industry.
Residential starts decreased 1.4% last month to a 1.382 million annualized rate, according to government data released Thursday. Single-family homebuilding jumped to an annualized 909,000 rate. Economists surveyed by Bloomberg called for a 1.36 million pace of total residential starts in December.
Applications to build, a proxy for future construction, decreased 1.6% to an annualized 1.33 million units. Permits for construction of one-family homes fell 6.5%.
Initial unemployment claims dropped to 190,000 compared to 205,000 in the previous week. Claims were expected to rise to 214,000, per Bloomberg estimates.
Meanwhile, the Philadelphia Fed Manufacturing Index improved modestly in January to -8.9 from -13.8 in December. This reading came in better than the forecasted -10.3.
Investors are starting to enter what’s likely a challenging fourth-quarter earnings season, with analysts downgrading their forecasts for earnings growth. According to the data from FactSet Research – the consensus for earnings drop is 3.9%, which would mark the first year-over-year earnings decline reported by the index since 2020 if realized.
DataTrek’s Nicholas Colas notes that the power of corporate earnings remains a question mark. Fourth-quarter earnings should provide some insight, but commentary from management on this year’s fundamentals will be more important. The problem, in Colas’ opinion, is that no CEO has an incentive to be upbeat right now.
Netflix (NFLX) took center stage as it reported earnings on Thursday after the market closed, kicking off a two-week period during which most of the market’s biggest tech companies will report their quarterly results.
The streaming giant’s cofounder, Reed Hastings, said he would be transition from co-chief executive to executive chairman, while naming a new co-CEO, current COO Greg Peters, alongside Ted Sarandos.
Netflix beat its forecasts for subscribers in the final quarter, increasing by nearly 7.7 million new customers. The firm had previously expected to add 4.5 million during the period. Shares rose 3% after the close.
Procter & Gamble (PG) shares slipped 2% Thursday after the company raised its full-year sales forecast on the back of price increases to cover transportation, commodity, labor costs, and the impact of a strong U.S. dollar hitting its overseas revenue.
Amazon (AMZN) shares were down nearly 2% as the company reported it would shut down its charity donation program AmazonSmile. The decision to end the decade-old program is the latest aimed at reducing costs at the company.
In commodities markets, West Texas Intermediate (WTI), the U.S. benchmark, rose over 1% to $80 per barrel. At the same time, gas prices are up 5.33% since the end of 2022, according to AAA data.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv