U.S. Stocks Little Changed Following Yesterday’s Rally

Following the rally seen in the previous session, stocks have shown a lack of direction over the course of the trading day on Thursday. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are narrowly mixed. While the Dow is down 17.79 points or less than a tenth of a percent at 43,203.76, the Nasdaq is up 8.07 points or less than a tenth of a percent at 19,519.30 and the S&P 500 is up 9.10 points or 0.2 percent at 5,959.01.

The choppy trading on Wall Street comes as traders take a step back to assess the near-term outlook for the markets following yesterday’s rally, which saw the major averages post their largest daily percentage gains in over two months.

Traders are also digesting a slew of U.S. economic data, including reports on weekly jobless claims, retail sales and import prices.

The Labor Department released a report showing initial jobless claims climbed to 217,000 in the week ended January 11th, an increase of 14,000 from the previous week’s revised level of 203,000. Economists had expected jobless claims to rise to 210,000.

The bigger than expected increase came after jobless claims fell to their lowest level since hitting 200,000 in the week ended February 17, 2024.

The Commerce Department also released a report showing retail sales in the U.S. increased by less than expected in the month of December.

The report said retail sales rose by 0.4 percent in December after advancing by an upwardly revised 0.8 percent in November. Economists had expected retail sales to climb by 0.6 percent.

Meanwhile, the report said core retail sales, which exclude automobiles, gasoline, building materials and food services, climbed by 0.7 percent in December after rising by 0.4 percent in November.

“Retail sales in December were flattered by a price-related increase in gasoline station sales, but the details were generally encouraging, with a broad-based underlying control group rising at a strong pace,” said Michael Pearce, Deputy Chief U.S. Economist at Oxford Economics.

Following yesterday’s more closely watched report on consumer price inflation, the Labor Department also released a report showing import prices in the U.S. crept up in line with estimates in the month of December.

The Labor Department said import prices inched up by 0.1 percent in December, matching the upticks seen in November and October as well as expectations.

“Import prices rose modestly in December, capping off an encouraging week of inflation data and keeping the Fed on track to cut rates in the first half of this year,” said Matthew Martin, Senior U.S. Economist at Oxford Economics.

He added, “The recent rise in global oil prices will feed through to higher fuel import prices and some volatility to the data, but we expect the Fed will look through any temporary sources of inflation.”

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Semiconductor stocks have shown a strong move to the upside, however, with the Philadelphia Semiconductor Index climbing by 1.6 percent.

Shares of Taiwan Semiconductor Manufacturing (TSM) have surged by 5.2 percent after the chipmaker provided upbeat revenue guidance for the current quarter.

Considerable strength is also visible among brokerage stocks, as reflected by the 1.5 percent gain being posted by the NYSE Arca Broker/Dealer Index.

Interest rate-sensitive utilities and commercial real estate stocks are also seeing notable strength, while banking stocks are giving back ground following yesterday’s rally.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index rose by 0.3 percent, while Hong Kong’s Hang Seng Index jumped by 1.2 percent.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index has surged by 1.8 percent, the U.K.’s FTSE 100 Index is up by 0.7 percent and the German DAX Index is up by 0.1 percent.

In the bond market, treasuries are seeing modest strength following the rally seen on Wednesday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.0 basis points at 4.633 percent.

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