Market Performance: Mixed Results Amid Technology Weakness
The S&P 500 Index ($SPX) (SPY) closed down -0.21% on Thursday, followed by the Dow Jones Industrials Index ($DOWI) (DIA) at -0.16%, and the Nasdaq 100 Index ($IUXX) (QQQ) down -0.69%. March E-mini S&P futures (ESH25) saw a decline of -0.38%, while March E-mini Nasdaq futures (NQH25) fell -0.93%.
Market Influences: Technology and Health Insurance Stocks Struggle
On Thursday, stocks faced moderate losses, largely due to declines in major technology firms. Health insurance stocks also took a hit as UnitedHealth Group dropped more than -6% after falling short of Q4 revenue expectations. This combination pressured the overall market.
In contrast, chip manufacturers provided a bright spot after Taiwan Semiconductor Manufacturing Co (TSMC), a key supplier for Apple and Nvidia, set its capital expenditure target significantly higher than estimates. This news sparked optimism about continued investment in artificial intelligence technologies.
Fed Comments and Economic Indicators Provide Mixed Signals
The bond market reacted positively as yields fell following dovish comments from Fed Governor Waller. He suggested that if inflation decreases, the Federal Reserve could implement more rate cuts than the market currently anticipates, potentially 3 or 4 cuts this year if economic data supports it.
Support for stocks also came from improved expectations after Wednesday’s U.S. consumer price report indicated easing core inflation, which enhanced speculation about possible Fed rate cuts in the near future.
However, economic data released on Thursday presented a mixed picture. December retail sales increased by +0.4% month-over-month, falling short of the +0.6% estimate, and weekly jobless claims rose by 14,000 to a total of 217,000, exceeding expectations of 210,000. The Philadelphia Fed’s business outlook survey, however, surged to a 3-3/4 year high.
Global Market Movements: A Positive Outlook
Despite U.S. struggles, overseas markets performed well. The Euro Stoxx 50 reached a 9-1/2 month high with a +1.4% increase, while China’s Shanghai Composite Index rose +0.28% to its highest level in a week and a half. Japan’s Nikkei Stock 225 also added +0.33%.
Interest Rates: Trends and Expectations
March 10-year T-notes (ZNH25) increased by +9 ticks, with the yield on 10-year T-notes falling -4.7 basis points to 4.606%. The yield reached a one-week low of 4.586% as traders reacted to Waller’s comments and disappointing economic news on retail sales and jobless claims.
In Europe, government bond yields declined, with the 10-year German bund yield dropping -1.3 basis points to 2.547%, and the 10-year UK gilt yield falling -5.1 basis points to 4.679%.
S&P 500 Non-Performers: Major Stocks Take a Hit
Technology stocks struggled, with Apple (AAPL) down more than -4% and Tesla (TSLA) retreating over -3%. Nvidia (NVDA), Alphabet (GOOGL), and Amazon.com (AMZN) also fell by more than -1%. Health insurance stocks faltered after UnitedHealth Group (UNH) reported Q4 revenues of $100.81 billion, below estimates.
US Bancorp (USB) and Texas Instruments (TXN) both closed down more than -5%. Concerns about allegations related to chip manufacturing in China impacted Texas Instruments, which focuses on producing lower-end chips.
Stock Movers: A Mix of Gains and Losses
Despite broader market challenges, several stocks showed strength. Semiconductor stocks, buoyed by TSMC’s positive outlook, included Lam Research (LRCX) and KLA Corp (KLAC), both closing up over +4%. Dexcom (DXCM) led S&P 500 gainers, rising over +5% after an upgrade from Baird.
Additionally, Estee Lauder (EL) and Morgan Stanley (MS) both saw gains after positive earnings reports, while Symbotic (SYM) soared +19% after acquiring Walmart’s Advanced Systems and Robotics business.
Upcoming Earnings Reports
Looking ahead, earnings season begins this week, with notable companies such as Citizens Financial Group Inc (CFG), Fastenal Co (FAST), and Schlumberger NV (SLB) set to report their fourth-quarter results. According to Bloomberg Intelligence, S&P 500 earnings are expected to grow by 7.5% in Q4, marking the second-highest pre-season forecast in three years.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
