In the aftermath of the previous session's rally, Thursday's trading has been characterized by a lack of clear direction, with major stock indices fluctuating around the baseline. As of now, the indices present a mixed picture. The Dow has edged down by 17.79 points, or less than 0.1%, settling at 43,203.76. Conversely, the Nasdaq has inched up by 8.07 points, or less than 0.1%, to 19,519.30, while the S&P 500 has recorded a rise of 9.10 points, amounting to a 0.2% increase, positioning it at 5,959.01.
The erratic market activity reflects traders stepping back to evaluate the markets' near-term prospects following Wednesday's rally, which marked the most significant daily percentage increases in over two months. In conjunction with this uncertainty, traders are absorbing a multitude of U.S. economic data, including figures on weekly jobless claims, retail sales, and import prices.
The Labor Department reported an increase in initial jobless claims to 217,000 for the week ending January 11th, up by 14,000 from the previous week's adjusted figure of 203,000, exceeding economists' prediction of a rise to 210,000. This unexpected uptick followed a period when jobless claims were at their lowest since reaching 200,000 in the week ending February 17, 2024.
Moreover, the Commerce Department unveiled that U.S. retail sales grew by less than anticipated in December. Retail sales rose by 0.4% in December, following an upwardly revised 0.8% gain in November, against expectations of a 0.6% increase. However, core retail sales, which exclude vehicles, fuel, building supplies, and food services, ascended by 0.7% in December, an improvement from the 0.4% rise in November.
"Retail sales in December were buoyed by a price-related hike in gasoline station sales, though the underlying control group exhibited a robust growth trajectory," observed Michael Pearce, Deputy Chief U.S. Economist at Oxford Economics.
After the closely watched consumer price inflation report, the Labor Department also disclosed that U.S. import prices edged up as projected in December. Import prices inched up by 0.1% for the month, consistent with the increases recorded in November and October, aligning with expectations.
"Import prices saw a modest rise in December, concluding a week of positive inflation data and maintaining the Fed's trajectory for a rate cut in the year's first half," stated Matthew Martin, Senior U.S. Economist at Oxford Economics. He further noted, "The global oil price uptick will likely affect fuel import costs and introduce some volatility, yet the Fed may overlook temporary inflationary spikes."
In terms of sector news, the majority of sectors have experienced only slight movements, mirroring the broader market's subdued performance. Notably, semiconductor stocks experienced a notable upswing, with the Philadelphia Semiconductor Index rising by 1.6%. Shares of Taiwan Semiconductor Manufacturing (TSM) notably surged by 5.2%, following its favorable revenue guidance for the current quarter. There is also considerable strength in brokerage stocks, with the NYSE Arca Broker/Dealer Index gaining 1.5%. Additionally, utilities and commercial real estate stocks, sensitive to interest rate changes, have shown strength, whereas banking stocks have retreated after the previous day’s rally.
Looking at international markets, the Asia-Pacific region saw mostly positive trading on Thursday, with Japan's Nikkei 225 Index increasing by 0.3% and Hong Kong's Hang Seng Index advancing by 1.2%. European markets also moved upward, with France's CAC 40 Index surging by 1.8%, the U.K.'s FTSE 100 Index rising by 0.7%, and Germany's DAX Index gaining 0.1%.
In the bond market, treasuries are experiencing moderate strengthening following Wednesday's rally, leading the yield on the benchmark ten-year note, which moves inversely to its price, to decrease by 2.0 basis points, settling at 4.633%.
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