4:13pm: Wall Street reverses gains
The stock market closed lower on Thursday, with all three major indices ending in negative territory.
The Nasdaq led the decline, falling 0.5% or 92 points to close at 19,419. The Dow Jones Industrial Average dropped 0.1% or 57 points, ending the session at 43,164. The S&P 500 also edged down 0.1% or 5 points, finishing at 5,945.
The day's losses came after a strong rally on Wednesday, which was fueled by a moderate improvement in core inflation data. Investors also digested weaker-than-expected retail sales figures and an unexpected rise in jobless claims, which kept hopes alive for potential Federal Reserve rate cuts.
In corporate news, major banks continued to report earnings, with Bank of America and Morgan Stanley posting strong fourth-quarter profits. Despite these positive results, the broader market struggled to maintain momentum from the previous session's gains.
1:45pm: Minimal movement
Stocks are trading with minimal movement following Wednesday's robust rally fueled by softer inflation data and strong bank earnings.
The Dow and the S&P 500 are holding steady near the flatline as the Nasdaq dipped slightly by 0.4%.
Investors remain cautiously optimistic as they monitor corporate earnings from Bank of America and Morgan Stanley, anticipate December retail sales data, and analyze the implications of easing inflation trends.
12:25pm: Solid retail trends
Retail sales rose a little less than expected in December, but upward revisions to October and November meant the trend is still solid, says Comerica's Bill Adams.
"The US consumer continues to propel the economy forward," Adams commented Thursday.
"Low and moderate income households are still under pressure from recent years’ big increases in the cost of living, but more affluent Americans are spending openhandedly and propelled economic growth last year."
Consumer spending is likely to provide a tailwind to economic growth in 2025, Adams added.
"Incomes outpaced inflation in 2024, which should ease financial pressures on low- and moderate-income households. And the robust increase of household net worth and improving animal spirits should fuel discretionary spending growth by more affluent households on durable goods and high-end categories."
11.15am: Trump Treasury pick demands support for tax cuts, tariffs
US stock markets are keeping their powder dry on Thursday, with the S&P 500 marginally above flat, while the Dow Jones and Nasdaq Composite indexes are just in the red.
US Treasuries were in more demand following the retail sales earlier, with yields on US borrowing costs dropping across the board.
Meanwhile, in Washington, Donald Trump's pick to run the US Treasury Department has threatened that the largest tax increase in history of $4 trillion could be needed if Congress does not back the incoming president's economic agenda.
Treasury Secretary nominee Scott Bessent said at his confirmation hearing that the US currently has a "significant spending problem".
The billionaire hedge fund manager said if President-elect Trump's 2017 tax cuts are not renewed, the US will face "economic calamity" and will need big tax increases.
Instead, he said the Trump administration's plan is to revive the American economy through pro-growth regulatory policies, reducing taxes and "unleashing American energy".
He said: "I believe that President Trump has a generational opportunity to unleash a new economic golden age that will create more jobs, wealth and prosperity for all Americans."
On tariffs, he said: "We must secure supply chains that are vulnerable to strategic competitors, and we must carefully deploy sanctions as part of a whole-of-government approach to address our national security requirements.
"And critically, we must ensure that the US dollar remains the world’s reserve currency."
10.20am:
US retail sales increasing 0.4% month-over-month in December was a little weaker than expected and economists said they expect the first quarter of 2025 may see consumption growth slow modestly, helped by households increasing spending in an attempt to front-run likely tariffs imposed by the incoming Trump regime.
The consensus forecast was 0.6%, "but this was actually a strong report", says Paul Ashworth at Capital Economics, adding that it boosts his fourth-quarter GDP growth estimate to 2.9%.
The downside surprise was principally due to an unexpected 2.0% monthly decline in building materials sales and a small dip in food services sales, plus a smaller than expected rebound in gasoline station sales.
"All those components are excluded from the control group sales measure, which increased by a bigger than expected 0.7% m/m last month.
"That control group measure is what matters for the monthly consumption data," says Ashworth.
He estimates real consumption increased 0.4% m/m in December, which would translate into a 3.3% annualised gain in the fourth quarter, which "would also represent a strong handover to the first quarter, when we expect consumption growth to slow only modestly, particularly if households increase spending in an attempt to front-run likely tariffs".
Oliver Allen at Pantheon Macroeconomics says he suspects worries about tariffs are already prompting households to bring forward purchases of other types of durable goods.
He points to the Michigan survey’s index tracking whether consumers think now is a good time to buy a major household item surged between November and early January, "presumably due to tariff fears after the election".
He calculates that real household spending increased by 3.5% in the fourth quarter, a bit stronger than its average pace over the previous four quarters, 2.9%.
"Pre-emptive purchases in anticipation of new tariffs likely will continue to provide some support spending in the near term, but this boost will flip to become a drag after tariffs are either imposed or the threat fades," says Allen.
"Moreover, we think the sustainable trend in spending growth is much softer now that pandemic-era excess savings are depleted for most households.
"The personal saving rate already is very low, and growth in both employment and wages is slowing," he says, predicting consumer spending will rise by about 1.5% in 2025.
10am: Wall Street subdued at open
Wall Street faced a subdued start on Thursday as stocks failed to build on a rally following news of easing core inflation earlier in the week.
The Dow Jones fell 0.2% as trading got underway, while the Nasdaq and S&P 500 dipped below the mark.
After sharp gains on Wednesday figures showing a surprise drop in core inflation throughout December, declines followed underwhelming retail sales figures on Thursday.
Sales climbed by 0.4% last month to US$729.2 billion, according to the US Census Bureau, slowing against November’s 0.8% and missing expectations for a 0.6% increase.
Among companies, Morgan Stanley and Bank of America Corp were among Wall Street firms to report on Thursday.
Shares in the former edged up 1.4% early on after it unveiled almost doubled net income of US$3.7 billion in the fourth quarter and record full-year revenue of US$61.8 billion.
Bank of America was flat in the meantime, despite expectation-beating net income of US$6.7 billion, or US$0.82 a share, in the fourth quarter.
8.47am: Retail sales undershoot expectations
Retail sales across the United States grew slower than expected in December, figures showed on Friday.
According to the US Census Bureau, sales climbed by 0.4% month on month to US$729.2 billion.
This was against an upwardly revised 0.8% rise in November and below expectations for a 0.6% increase.
Sales growth also slowed from 4.1% to 3.9% in December on an annual basis.
Futures continued to point to a mixed start on Wall Street following the figures, with the Nasdaq seen up 0.3%, but S&P 500 and Dow Jones set to drop.
6.45am: Nasdaq, S&P 500 set to extend gains
Wall Street appeared on course for a mixed start on Thursday after Wednesday’s rally in the wake of soft core inflation figures for December.
Futures had the Nasdaq adding another 0.5% and the S&P 500 rising by 0.3% ahead of the opening bell.
Each had surged by 2.5% and 1.8% respectively on Wednesday after news of the surprise drop in core inflation last month.
The Dow Jones was seen reversing 0.2% in the meantime, after a 1.7% gain on Wednesday.
Retail sales figures for December came into focus on Thursday, with markets anticipating a 0.6% increase following the previous month’s 0.7% uptick.