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U.S. stocks on Thursday had pushed higher, as Wall Street continues to largely rebound from the hotter-than-anticipated consumer inflation report earlier this week which put a dampener on its inexorable rally.
The Nasdaq Composite (COMP.IND), which had been under pressure through most of the day, had pushed slightly into positive territory, rising 0.25% to 15,898.25 points in afternoon trade.
The benchmark S&P 500 (SP500) was higher by 0.54% to 5,027.72 points, while the blue-chip Dow (DJI) added 0.76% to 38,718.14 points.
All 11 S&P sectors were in the green, with the exception of Technology.
Thursday’s economic calendar was a crowded one, and data was a mixed bag. Investors appeared to focus on two big positives, however. Firstly, retail sales fell 0.8% M/M to $700.3B in January, significantly higher than the expected 0.1% decrease and a turnaround from December 2023’s +0.4% rise. Shortly after, another report showed that U.S. industrial production ticked down 0.1% M/M in January.
In the wake of the hot consumer price index numbers earlier this week, the retail sales data in particular is likely welcomed by the Federal Reserve. After months of consumer spending surprising to the upside, the January reading shows that perhaps the consumer is ready to take a break. The fall in industrial production, meanwhile, hints at the slowdown in the economy that the Fed wants to see.
“The (retail sales) data suggest the consumer lost momentum at the start of the year. On a year-ago basis, control group sales growth slipped to 2.4%, which is the slowest gain since April 2020, when the economy was in the depths of the pandemic,” Wells Fargo’s Tim Quinlan said.
“Consumer resilience is positive in the sense that it helps ward off economic contraction but could be problematic if it gets in the way of the downtrend in consumer inflation,” Quinlan added.
On the other hand, some other economic indicators continued to point to resilience in the labor market and the economy. The number of Americans filing for initial jobless claims in the past week fell more-than-anticipated to 212K, compared to a consensus of 219K. Additionally, the Philadelphia Fed’s gauge of manufacturing activity in February put in its first positive reading since August last year.
“Simplest way to think about today’s data is that it leaves things running in place. January’s data were on the softer side. Like January’s jobs data, weather conditions played a role. February’s survey measures (regional PMIs, NAHB) were on the sunnier side of the consensus,” Renaissance Macro said on X (formerly Twitter).
Treasury yields were largely to the downside, continuing their rebound from a sharp sell-off following the hot CPI data earlier in the week. The longer-end 30-year yield (US30Y) was down 3 basis points to 4.42%, while the 10-year yield (US10Y) was also down 3 basis points to 4.24%. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 1 basis point to 4.57%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Turning to active movers, Deere (DE) was a top percentage loser on the S&P 500 (SP500), after the agricultural machinery giant issued disappointing profit guidance.
Paramount Global (PARA) (PARAA) was a top percentage loser as well, after Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) chopped its stake in the entertainment company.
