US stocks moved lower on opening Thursday as investors dissected the latest economic data and braced for more Fedspeak and the start of earnings season from corporate tech giants.
The S&P 500 (^GSPC), the Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (^IXIC) were all down about 0.5% at the start of trading.
Bond prices rose. The yield on the benchmark 10-year US Treasury bond fell to 3.368% from 3.374% on Wednesday. The dollar index traded lower on Thursday morning.
Stocks tumbled on Wednesday after new government data showed a slowdown in consumer spending, while a reading of wholesale price inflation showed signs that price pressures in the economy are easing. The S&P 500 had its worst day since mid-December on Wednesday and failed to hold the 200-day moving average, according to JP Morgan’s US Market Intelligence team.
Wall Street is set to sit through another round of data on Thursday, as well as comments from Vice Chair Lael Brainard, Bank of New York President John Williams and Bank of Boston President Susan Collins. All three Fed speakers will attend various events ahead of the next Fed monetary policy meeting, which begins Jan. 31.
On Wednesday, other Fed officials called for more rate hikes. James Bullard, St. Louis Fed President, said policymakers should raise interest rates above 5% “as soon as possible” before pausing the current cycle of rate hikes.
On the economic data front, US housing construction continued to fall in December, the fourth straight monthly decline, ending a disappointing year for the industry.
Housing starts fell 1.4% last month to 1,382 Millions on an annual basis, according to government data released on Thursday. Single-family home construction rose to an annualized rate of 909,000. Economists polled by Bloomberg called for a pace of 1.36 million total housing starts in December.
Building applications, an indicator of future construction, fell 1.6% to an annualized 1.33 million units. Permits for the construction of single-family houses fell by 6.5%.
The story goes on
Initial jobless claims fell to 190,000 from 205,000 the previous week. Bloomberg estimates claims should rise to 214,000.
Meanwhile, the Philadelphia Fed Manufacturing Index improved slightly to -8.9 in January from -13.8 in December. This reading was better than the predicted -10.3.
Investors are beginning what will likely be a challenging fourth-quarter earnings season as analysts downgrade their forecasts for earnings growth. According to data from FactSet Research, the consensus for an earnings decline is 3.9%, which would mark the first year-over-year earnings decline reported by the index since 2020, if realized.
DataTrek’s Nicholas Colas notes that the power of corporate earnings remains a question mark. Fourth quarter results should provide some insight, but management’s comments on this year’s fundamentals will be more important. The problem, according to Colas, is that no CEO has any incentive to be optimistic right now.
Netflix (NFLX) will take center stage as it reports earnings after the market close on Thursday, ushering in a two-week period in which most of the market’s biggest tech companies will report their quarterly earnings.
The streaming giant’s results are being closely monitored, with this quarterly update taking a closer look at the company’s subscriber dynamics over the last period of last year and every hue at its ad-supported service tier. Additionally, the company could provide potential updates on its planned crackdown on password sharing.
Netflix logo is pictured at the 2022 Paris Auto Show in Paris, France, October 17, 2022. Portal/Stephane Mahe
In market-specific moves, shares of Alcoa (AA) fell Thursday after the U.S.-based aluminum maker reported lower aluminum product prices in late 2022.
Shares of Procter & Gamble (PG) fell 1% on Thursday morning after the company raised its full-year sales guidance on price hikes to cover transportation, raw material and labor costs and the impact of a strong US dollar on its overseas sales .
In commodity markets, West Texas Intermediate (WTI) rose nearly 1% to $80 a barrel. At the same time, gas prices are up 5.33% since the end of 2022, according to AAA data.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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