Stock market today: Nasdaq slide leads stocks lower with earnings, Bessent confirmation hearing in focus

Updated Thu, Jan 16, 2025, 4:08 PM 2 min read

US stocks closed lower Thursday, as the major indexes struggled to build on the previous day’s surge amid another round of big bank earnings and a slide in tech stocks. Investors also watched the Capitol Hill confirmation hearing of President-elect Donald Trump’s pick for Treasury Secretary, Scott Bessent.

The S&P 500 (^GSPC) fell about 0.2% while the Dow Jones Industrial Average (^DJI) slipped more than 0.1%. The tech-heavy Nasdaq Composite (^IXIC) fell almost 0.9%, leading the way down, as several large-cap tech stocks like Nvidia (NVDA) and Tesla (TSLA) underperformed.

Markets were coming off a major one-day rally on the heels of a surprise easing in consumer inflation that prompted questions about whether the pricing out of interest-rate cuts this year had gone too far. Stocks ripped higher on Wednesday on the back of the data and stellar earnings from major US lenders.

Traders have now ramped up bets that the Federal Reserve lowers rates before July, reversing the pile-out that was sparked by the stronger-than-expected December jobs report.

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Retail sales for December grew by 0.4%, versus expectations of 0.6%. The monthly gain slowed from November’s 0.7% increase.

Meanwhile, Bank of America (BAC) results showed fourth quarter profit more than doubled as the bank benefitted from a Wall Street dealmaking revival that has also boosted earnings at its rivals. Its shares were down less than 1% on the day. Morgan Stanley’s (MS) stock rose more than 4% after it posted a surge in quarterly profit before the bell.

Elsewhere in earnings, UnitedHealth’s (UNH) fourth quarter revenue fell short of estimates, dented by weakness in its health insurance unit. The stock slid about 6%.

Also taking focus Thursday was the Senate Finance Committee hearing on Bessent’s confirmation. Some of the topics touched upon during the meeting included tariffs, debt concerns and tax plans.

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The ‘Magnificent Seven’ lag on Thursday

After a day of outperformance on Wednesday, the “Magnificent Seven” tech stocks lagged on Thursday.

Microsoft (MSFT) was the only of the seven stocks to not fall more than the Nasdaq’s 0.89% loss on the day.
Investor sentiment hits lowest level since November 2023

Well, so much for everyone is too bullish on stocks.

Investor sentiment is now least bullish its been since November 2023, according to the latest AAII Investor Sentiment Survey.

The survey asks investors what direction the market will head in the next 6 months. Just 25.4% said bullish, well off the mid 52-week high of 52.7% seen in mid-July. Meanwhile, 40.6% of respondents voted the next six months would be bearish, the highest level seen in more than a year.

The switch in sentiment comes after an overarching bullish on vibe to end 2024. All but one of the 17 strategists who issue year-end targets for the S&P 500 and are tracked by Yahoo Finance called for further gains in the benchmark index this year. Meanwhile, December survey of fund managers from Bank of America showed a record amount of respondents overweight US equities.

But in recent weeks, the market action has displayed some level of pause in the optimism for 2025 as stocks have stumbled amid a large surge in the 10-year Treasury Yield (^TNX). Fears over already sticky inflation — and the potential Donald Trump’s policies could only make matters worse — have caused investors to push back their hopes for Federal Reserve interest rate cuts. And in turn, that’s weighed on the equity market.

The last time the AAII Investor Sentiment Survey was this bleak in November 2023 it proved to be around the turning point of a three-month drawdown that also coincided with a rapid rise in the 10-Year Treasury yield.

Given things can stay either bullish or bearish for longer than one might expect, sentiment readings are often meant to be read with a grain of salt. But for now, one thing is clear. It’s no longer fair to say “everyone is bullish right now.”
TSM jumps on earnings beat, despite new US export restrictions

The US-listed equity of Taiwan Semiconductor Manufacturing Company (TSM) jumped 4.8% Thursday after the contract chip manufacturer’s earnings surpassed expectations.

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The company, which manufactures AI chips for Nvidia and Apple, reported sales of $26.9 billion for the fourth quarter (versus the $25.8 billion expected), and its 2025 revenue outlook was ahead of analyst expectations.

The stock’s jump comes even as the US clamps down on TSMC’s dealings with Chinese customers. The outgoing Biden administration on Wednesday unveiled restrictions aimed at limiting Chinese technology firm Huawei’s ability to order AI chips through shell companies from TSMC, for example.

TSMC Chairman and CEO C.C. Wei said in a call with Wall Street analysts Thursday that the new rules are “manageable.”

“My customers who are being restricted, we are applying for the special permit for them,” he said, “We have confidence that they will get some permission, so long as they are not in the AI area.”

Read more about the export restrictions here.
US economy not ‘out of the woods’ despite positive inflation data

Stocks rallied Wednesday after December’s CPI print finally showed some relief in core inflation and investors calibrated Fed rate cut bets.

But the threat of sticky prices still looms in the face of a regime change in Washington when President-elect Donald Trump takes office next week. And economists largely agree that the fight to curb inflation is far from over.

“It hasn’t been steady on inflation,” Claudia Sahm, chief economist at New Century Advisors and former Federal Reserve economist, told Yahoo Finance’s Morning Brief program. “It’s been quite uneven.”

Although inflation has been slowing, it has remained above the Federal Reserve’s 2% target on an annual basis. Higher costs for shelter and core services like medical care and insurance have contributed to stubborn readings in recent months, with consumers simultaneously feeling the pinch at grocery stores and also at the pump.

“I don’t think we’re completely out of the woods here,” Ed Yardeni, president of Yardeni Research, told Yahoo Finance’s Market Domination Overtime. “We have to remember that towards the end of 2023, there were disinflation trends. And then we got into 2024 and we saw a little bit of a reversal of that.”

Rising wages and a strong labor market have somewhat offset recent pricing pressures, but underlying trends have shown continued stickiness in categories that most households rely on. That makes the Fed’s job even tougher to pull off.

“It’s a bit of a breather to get some ‘not not’ bad news,” Sahm said, referencing December’s deceleration in shelter inflation and monthly core prices. But “it’s really not a game changer. It’s a lot more of what we’ve seen with the month-to-month volatility mixed in.”

And volatility will likely pick up with Trump set to take office on Monday.

Trump’s proposed policies, such as high tariffs on imported goods, tax cuts for corporations, and curbs on immigration, are seen as inflationary. And those policies could further complicate the central bank’s path forward for interest rates.

Read more here.
Gold jumps above $2,700 as optimism of rate cuts grow

Gold (CG=F) jumped to its highest level in a month on Thursday as traders reassessed the amount of rate cuts the Federal Reserve could implement this year following an easing inflation print this week.

Bullion futures rose more than 1%, trading above $2,740 percent ounce. Gold, which does not bear a yield, tends to rise when interest rates fall.

Wednesday’s Consumer Price Index prompted traders to ramp up bets that the Federal Reserve will opt to lower rates before July, reversing a wave of pessimism around cuts sparked by last Friday’s stronger-than-expected December jobs report.
December retail sales signal strong economic growth to end the year

December retail sales data showed the US economy likely ended 2024 growing at a solid pace amid questions over how quickly the Federal Reserve will cut interest rates.

The control group in Thursday’s release, which excludes several volatile categories and factors into the gross domestic product (GDP) reading for the quarter, increased by 0.7%, above economists’ estimates for 0.4% sales growth.

“This was actually a strong report that boosts our fourth-quarter GDP growth estimate to 2.9% [from 2.7%],” Capital Economics chief North America economist Paul Ashworth wrote in a note to clients on Thursday.

After the release, the Atlanta FedGDP Now Tool, which takes economic data released throughout the quarter to create GDP projection, now forecasts the US economy grew at an annualized pace of 3% in the fourth quarter. The projection moved up from 2.7% after the retail sales release.
Treasury Secretary nominee Scott Bessent supports tougher sanctions on Russia to end Ukraine war

The nominee for Treasury Secretary, Scott Bessent, said he would support tougher sanctions against Moscow in order to end the Ukraine war, if President-elect Donald Trump were to request them.

“If I’m confirmed, and if President Trump requests, and as part of his strategy to end the Ukraine war…I will be 100% on board for taking sanctions up, especially on Russian oil majors, to levels that will bring the Russian Federation to the table,” said Bessent during a Senate confirmation hearing on Capitol Hill.

The US Treasury recently announced broad-based sanctions against Russian energy in order to cut off Moscow’s revenue amid the ongoing war in Ukraine. Bessent questioned the timing of those wider measures recently announced, which have sent oil prices higher just before Trump takes office.

However he expressed support for using tough sanctions as part of a negotiation tactic to bring the Ukraine-Russia conflict to and end.

During the hearing, Bessent also stated his support for sanctions against Iran.
Bank of America and Morgan Stanley cement a Wall Street revival

Yahoo Finance’s David Hollerith reports:

Fourth-quarter 2024 profits at Bank of America (BAC) and Morgan Stanley (MS) more than doubled, cementing a Wall Street revival that has dealmakers optimistic about the coming Trump era in 2025.

Strong investment banking and trading results also helped push profits higher at other big banks in the fourth quarter, including JPMorgan Chase (JPM), Goldman Sachs (GS), Citigroup (C), and Wells Fargo (WFC).

The six major US banks that have reported earnings so far this week showed a combined profit of more $36 billion in the fourth quarter and $145.7 billion for all of 2024.

The fourth quarter mark was more than double their collective profit in the fourth quarter of 2023, and the annual haul was 19% higher.

Read more here.
Mortgage rates top 7%, hitting 7-month high, but relief may be in sight

Yahoo Finance’s Claire Boston reports:

Mortgage rates rose this week to the highest level since May 2024 during a volatile period for the bonds that closely track them.

The average 30-year mortgage rate jumped to 7.04% through Wednesday, up from 6.93% a week earlier, after strong employment data pushed yields higher on the Treasury bonds that are most closely linked to mortgage rates. Average 15-year mortgage rates also rose to 6.27%, from 6.14%, according to Freddie Mac.

Read more here.
Drop in shares of Apple, Tesla drag on Nasdaq

Share of Apple and Tesla led the Nasdaq (^IXIC) lower on Thursday. The tech-heavy index dropped about 0.3%.

Apple stock declined more than 3%, on track for its lowest close since November. The iPhone maker has been under pressure over concerns of slowing sales in China.

Share of EV maker Tesla (TSLA) shares also dropped on Thursday, falling more than 3.5%. The company is offering new discounts on Cybertrucks, an indication that the electric vehicle pickup may be suffering from a slump.
‘We have a spending problem’: Treasury Secretary nominee Bessent

The nominee for Treasury Secretary Scott Bessent called out US federal spending in reaction to Senator Grassley’s comments about a fiscal imbalance during Thursday’s confirmation hearing.

“Yes, we do not have a revenue problem in the United States of America, we have a spending problem,” said Bessent.

“This spending is out of control. We are spending about 24% or 25% of GDP… we have never seen this before when it is not a recession or not a war,” said Bessent.

He added, “I’m concerned, because several times, the Treasury of the United States has been called upon to save the nation.” Bessent cited major borrowing amid events like World War II, the Great Depression, and the recent pandemic.
‘President Trump has a generational opportunity to unleash a new economic Golden Age’: Bessent

Scott Bessent, the nominee for Treasury Secretary highlighted an opportunity for a new ‘Golden Age’ for the US during opening remarks at his confirmation hearing.

“Today, 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,” Bessent told lawmakers on Thursday morning.

The nominee highlighted his life’s work in the private sector has given him a understanding of the economy and markets.

“Having never served in government, I intend if confirmed, to be in close contact with each of you and your offices, and seek your council,” said Bessent.

He also highlighted the need for the government to ensure the US Dollar remains the world’s reserve currency.
Senate hearing for Trump’s Treasury Secretary nominee kicks off

Lawmakers were making opening remarks on Thursday morning at the confirmation hearing for President-elect Donald Trump’s nominee for Treasury secretary, Scott Bessent.

The hearing is likely to last about two and a half hours.

Likely topics Bessent will face questions on include policies surrounding tariffs and Republican tax initiatives and spending plans for 2025.
Scott Bessent, nominee for Treasury Secretary, to face questions from lawmakers this morning

President-elect Donald Trump’s nominee for Secretary of the US Department of the Treasury, Scott Bessent, will face questions from lawmakers on Capitol Hill today starting at 10:30 a.m ET.

Yahoo Finance’s Ben Werschkul reports on two issues to watch for during the hearing: One is around a swirl of seemingly competing tariff plans before President-elect Donald Trump, some of which Bessent himself is reportedly pushing.

A second is whether Republicans will be able to ignore debt concerns and go big with their 2025 tax and spending plans.

Read more here.
Builder confidence ticks up despite elevated mortgage rates

Builders are starting the year with more optimism than in the end of 2024, despite elevated mortgage rates.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose to 47 in January, up one point from December and higher than economists’ estimates of 45, per Bloomberg data.

Still, a reading under 50 indicates more builders view conditions as poor rather than good.

The dilemma of high housing costs persists, with mortgage rates hovering closer to 7% over the past four consecutive weeks, according to Freddie Mac. Markets expect the Fed will likely leave rates unchanged this month, especially after fresh inflation data released Wednesday showed some signs of easing. The Fed doesn’t set mortgage rates but its actions influence the direction of yields, which in turn affect borrowing costs.

The NAHB survey showed builders continue to offer concessions in January. The survey found that 60% of builders used some sort of sales incentive to close the deal, while 30% of builders cut home prices to bolster sales in January. The average price reduction was 5%, matching December’s price cut.
Stocks open mixed as more earnings continue to roll in

US stocks were mixed on Thursday following the S&P 500’s (^GSPC) best daily performance since November and strong quarterly bank earnings.

The broad based index rose more than 0.1% while the Nasdaq Composite (^IXIC) increased about 0.3%. The Dow Jones Industrial Average (^DJI) hovered near the flatline.

Investors were watching for a continuation of Thursday’s performance when stocks ripped higher on the heels of better than expected inflation data and strong quarterly bank earnings.

Traders have been assessing how many rate cuts the Federal Reserve will implement this year following a better than expected jobs report last Friday but a cooling inflation print on Wednesday.

Goldman Sachs analysts said in a recent note they “now forecast two 25bp cuts this year in June and December (vs. three cuts previously in March, June, and September) followed by another cut in June 2026.”

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December retail sales grow less than expected, November sales revised higher

Yahoo Finance’s Josh Schafer reports:

Retail sales grew at a slower pace than Wall Street had expected in December as investors keep a close eye on the pace of economic growth amid questions over how quickly the Federal Reserve will cut interest rates.

Retail sales rose 0.4% in December. Economists had expected a 0.6% rise in spending, according to Bloomberg data. Meanwhile, retail sales in November were revised up to 0.8% from a prior reading that showed a 0.7% increase in the month, according to Census Bureau data.

Read more here.
Retail lightens up on the Mag 7 trade

Good chart by the Vanda Research team looking at Mag 7 flows from the retail trading community.

You can see activity having slowed down in January with names like Nvidia under pressure.

Dare I say it’s refreshing to see traders nibble at the other 493 stocks in the S&P 500!
Good morning. Here’s what’s happening today.
Not sold on the pre-market move on Target

Target (TGT) dropped its holiday sales results this morning, and the stock is up in the pre-market.

Not sure why Target didn’t blow me away!

Sales barely grew and the company reiterated its EPS outlook — an outlook that at the top end is $0.20 below current sell-side consensus.

Bottom line: This is yet another quarter from Target that sheds light on its continued market share loss to Walmart (WMT). Here’s what Walmart CEO Doug McMillon told me when accepting our 2024 Company of the Year award.

PS: I like Walmart’s new blue logo color that ties back to founder Sam Walton’s iconic trucker hat.