US stock markets closed lower on Thursday, following a significant surge the previous day. Major indexes struggled to maintain momentum amid a new wave of corporate earnings reports from large banks and a notable decline in the technology sector. Concurrently, investors closely followed the Senate confirmation hearing for President-elect Donald Trump’s nominee for Treasury Secretary, Scott Bessent.
Table Content:
Market Overview and Economic Data
The S&P 500 (^GSPC) experienced a decline of approximately 0.2%, while the Dow Jones Industrial Average (^DJI) dipped by over 0.1%. The tech-heavy Nasdaq Composite (^IXIC) led the downward trend, falling nearly 0.9% as large-cap tech companies like Nvidia (NVDA) and Tesla (TSLA) underperformed.
This downturn followed a substantial one-day rally fueled by a surprising slowdown in consumer inflation, raising questions about whether market expectations for interest rate cuts in the current year had become overly pessimistic. The previous day’s surge was also bolstered by positive earnings reports from major US lending institutions.
December’s retail sales figures showed a 0.4% increase, falling short of the anticipated 0.6% and indicating a slowdown from November’s 0.7% growth. This data point provided further context for investors gauging the strength of the US economy.
Earnings Season Highlights
Bank of America (BAC) reported a significant increase in fourth-quarter profits, more than doubling previous figures, thanks to a resurgence in Wall Street dealmaking activity that also benefited competitor institutions. Despite the positive earnings report, Bank of America shares experienced a minor decline of less than 1%. Morgan Stanley (MS) shares saw a more substantial increase, rising over 4% after announcing a significant surge in quarterly profit.
In contrast, UnitedHealth Group (UNH) reported fourth-quarter revenue that fell below expectations due to weakness in its health insurance division, resulting in a roughly 6% drop in its stock price. Taiwan Semiconductor Manufacturing Company (TSM) outperformed expectations, with a 4.8% jump in its US-listed equity after reporting strong earnings and a positive 2025 revenue outlook.
Bessent Confirmation Hearing and Investor Sentiment
The Senate Finance Committee’s hearing on Scott Bessent’s confirmation for Treasury Secretary drew considerable attention. Key discussion topics included tariffs, national debt concerns, and prospective tax reforms under the incoming Trump administration.
Bessent expressed support for strengthening sanctions against Russia to facilitate a resolution to the conflict in Ukraine, contingent on President-elect Trump’s request. He also voiced concerns about the timing of recent sanctions on Russian energy, citing their potential impact on oil prices. Furthermore, Bessent emphasized the importance of fiscal responsibility, stating that the US has a “spending problem,” not a “revenue problem.”
Recent market performance and shifting economic indicators have contributed to a decline in investor confidence. The AAII Investor Sentiment Survey revealed the lowest level of bullish sentiment since November 2023, indicating a shift in outlook following a predominantly optimistic period at the close of 2024.
Conclusion
Thursday’s market performance reflects a complex interplay of factors, including corporate earnings, economic data releases, and political developments. The decline in tech stocks, coupled with uncertainty surrounding the incoming administration’s economic policies and evolving investor sentiment, contributed to the overall downward trend. As the new year unfolds, investors will continue to monitor these factors closely for insights into the future direction of the market.
