U.S. stocks moved lower on the open Thursday as investors dissected the most recent batch of economic data and braced for more Fedspeak and the beginning of earnings season from corporate tech giants.
The S&P 500 (^GSPC), the Dow Jones Industrial Average (^DJI) and the technology-heavy Nasdaq Composite (^IXIC) were all down by roughly 0.5% initially of trading.
Bond prices ticked up. The yield on the benchmark 10-year U.S. Treasury note fell to three.368% from 3.374% Wednesday. The dollar index traded lower Thursday morning.
Stocks plummeted Wednesday after recent government data showed a slowdown in consumer spending activity, while a reading on wholesale price inflation showed signs that price pressures are easing within the economy. The S&P 500 had its worst day on Wednesday since mid-December, failing to carry the 200-day moving average, in accordance with the US Market Intelligence team at JP Morgan.
Wall Street will likely be navigating one other round of knowledge, in addition to remarks on Thursday from Vice Chair Lael Brainard, Bank of Recent York President John Williams, and Bank of Boston President Susan Collins. All three Fed speakers will likely be attending different events before the Fed’s next monetary policy meeting, which starts Jan. 31.
On Wednesday, other Fed officials called for more rate of interest hikes. St. Louis Fed President James Bullard said policymakers should move rates of interest above 5% “as quickly as we will” before pausing the present mountaineering cycle.
On the economic data front, recent US home construction continued to fall in December, the fourth consecutive monthly decline, closing out a disappointing 12 months for the industry.
Residential starts decreased 1.4% last month to a 1.382 million annualized rate, in accordance with the 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 construct, 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 in comparison with 205,000 within 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 got here in higher than the forecasted -10.3.
Investors are beginning to enter what’s likely a difficult fourth-quarter earnings season, with analysts downgrading their forecasts for earnings growth. In line with the information from FactSet Research – the consensus for earnings drop is 3.9%, which might mark the primary year-over-year earnings decline reported by the index since 2020 if realized.
DataTrek’s Nicholas Colas notes that the facility of corporate earnings stays a matter mark. Fourth-quarter earnings should provide some insight, but commentary from management on this 12 months’s fundamentals will likely be more essential. The issue, in Colas’ opinion, is that no CEO has an incentive to be upbeat at once.
Netflix (NFLX) is about to take center stage because it reports earnings on Thursday after the market closes, kicking off a two-week period during which a lot of the market’s biggest tech corporations will report their quarterly results.
The streaming giant’s results will likely be closely watched, with this quarterly update giving a more in-depth have a look at the corporate’s subscriber momentum in the ultimate period of last 12 months and any color on its advertising-supported service tier. Moreover, the corporate could provide potential updates on its planned crackdown on password sharing.
In market specific moves, shares of Alcoa (AA) dropped Thursday after the U.S. based aluminum producer reported lower prices for aluminum products at the top of 2022.
Procter & Gamble (PG) shares were down 1% Thursday morning 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 robust U.S. dollar hitting its overseas revenue.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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