U.S. stocks were lower on Thursday as investors analyzed the latest set of economic data and braced for more Fedspeak and the start of earnings season from corporate tech giants.
The S&P 500 (^GSPC) was down nearly 1%, while the Dow Jones Industrial Average (^DJI) was down 0.8% in midday trading. The tech-heavy Nasdaq Composite ( ^IXIC ) fell 1.1%.
Bond prices rose. The yield on the benchmark 10-year U.S. Treasury note fell to 3.368 percent from 3.374 percent on Wednesday. The dollar index is trading lower on Thursday morning.
Stocks fell sharply on Wednesday after new government data showed a slowdown in consumer spending activity, while data on wholesale price inflation showed signs that price pressures in the economy are easing. The S&P 500 had its worst day on Wednesday since mid-December, failing to hold above its 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 Chairman Lael Brainard said Thursday that the central bank should continue to tighten monetary policy “to ensure that inflation returns to 2 percent on a sustainable basis.”
Later Thursday, Bank of New York President John Williams and Bank of Boston President Susan Collins are expected to speak at two separate events ahead of the Fed’s next monetary policy meeting, which begins on January 31.
On Wednesday, other Fed officials called for more rate hikes. St. Louis Fed President James Bullard said policymakers should move interest rates above 5 percent “as quickly as possible” before halting the current hike cycle.
On the economic data front, new housing starts in the US continued to decline in December, the fourth straight monthly decline, capping a disappointing year for the industry.
New housing starts fell 1.4 percent last month to 1.382 million on a year-over-year basis, according to government data released Thursday. Single-family homebuilding jumped to an annual rate of 909,000. Economists polled by Bloomberg had called for a 1.36 million pace of total new home construction in December.
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Building applications, a proxy for future construction, fell 1.6% to an annualized 1.33 million units. Permits for the construction of single-family houses have become cheaper by 6.5%.
Initial jobless claims fell to 190,000 from 205,000 the previous week. Claims were expected to rise to 214,000, according to Bloomberg estimates.
Meanwhile, the Philadelphia Federal Reserve’s manufacturing index improved modestly in January to -8.9 from -13.8 in December. This reading was better than the predicted -10.3.
Investors are starting to tune into what is likely to be a challenging fourth-quarter earnings season, with analysts downgrading their earnings growth forecasts. According to data from FactSet Research, the consensus is for a 3.9% decline in earnings, which would mark the first year-over-year decline in earnings reported by the index since 2020, if it materializes.
DataTrek’s Nicholas Collas notes that the strength of corporate earnings remains a question mark. Fourth-quarter earnings should provide some insight, but management’s commentary on this year’s key metrics will be more important. The problem, according to Collas, is that no CEO has an incentive to be optimistic right now.
Netflix ( NFLX ) is set to take center stage as it reports earnings Thursday after the market close, kicking off a two-week period in which most of the market’s biggest tech companies will report their quarterly results.
The streaming giant’s results will be closely watched, with this quarterly update giving a closer look at the company’s subscriber momentum over the final period of last year and every color of its tier of ad-supported services. The company may also provide potential updates on its planned crackdown on password sharing.
The Netflix logo is pictured at the 2022 Paris Motor Show in Paris, France October 17, 2022. REUTERS/Stephane Mahe
In market-specific moves, shares of Alcoa ( AA ) fell on Thursday after the US-based aluminum producer reported lower prices for aluminum products at the end of 2022.
Shares of Procter & Gamble ( PG ) fell nearly 1% on Thursday morning after the company raised its full-year sales forecast amid price increases to cover transportation, freight, labor costs and the impact of a strong U.S. dollar, which hit her earnings abroad.
Shares of Amazon ( AMZN ) fell 2% after the company said it was shutting 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, West Texas Intermediate (WTI) rose nearly 1% to $80 a barrel. Meanwhile, gas prices have risen 5.33% since the end of 2022, according to AAA data.
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Danny Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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