Stocks closed lower again Wednesday after impressive retail sales data lowered expectations for a March rate cut. Today's earnings reports did little to lift investor sentiment, with one notable financial firm tumbling on a top-line miss.
Ahead of the open, data from the Census Bureau showed retail sales rose 0.6% from November to December and were up 5.6% on an annual basis. The results came in higher than economists were expecting thanks to a holiday-related pop in sales at clothing and general merchandise stores.
"The Fed was already hammering away on its 'no rush to cut rates' message, and today's stronger-than-expected retail sales won't give them any reason to change their tune," says Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Indeed, CME Group's FedWatch Tool indicates futures traders are now pricing in a 58% chance the Federal Reserve will cut interest rates by a quarter percentage point in March, down from 63% one day ago.
Tesla sheds $14 billion in market value on more price cuts
In single-stock news, Tesla (TSLA) slumped 2.0% – shedding $14 billion in market value – after the electric vehicle (EV) maker said it slashed the prices of its Model Y cars by up to 8% in several European countries, including Germany. The price cuts are similar to moves Tesla made earlier this month when it lowered the cost of its Model 3 and Model Y vehicles in China.
Focus will remain on Tesla and its price cuts next week, with the company slated to appear on Wednesday's earnings calendar. "For quarterly results, the debate will turn to margins," says UBS Global Research analyst Joseph Spak (Neutral, the equivalent of Hold). "We believe some pricing actions helped drive volume (margin negative) but this is likely offset by higher volume absorption and likely lower input costs."
Tesla's price action today sparked a broad selloff in EV stocks, with Nio (NIO, -3.8%), Rivian Automotive (RIVN, -6.0%) and XPeng (XPEV, -4.9%) among the day's biggest decliners.
Spirit Airlines continues to spiral after JetBlue bid is blocked
Elsewhere, Spirit Airlines (SAVE) stock continued to tumble after a federal judge on Tuesday blocked JetBlue Airways' (JBLU, -8.7%) $3.8 billion bid to buy the discount air carrier.
"A post-merger, combined firm of JetBlue and Spirit would likely place stronger competitive pressure on the larger airlines in the country," Judge William Young wrote in his ruling. "At the same time, however, the consumers that rely on Spirit's unique, low-price model would likely be harmed."
SAVE shares shed 47% Tuesday and another 22.5% today.
Schwab slips after reporting a top-line miss
On the earnings front, Charles Schwab (SCHW, -1.3%) made headlines after the brokerage firm disclosed its fourth-quarter results. Revenue for the three-month period fell 19% year-over-year to $4.46 billion, just shy of analysts' estimates, while earnings per share declined 36% – less than expected – to 68 cents per share.
CFRA Research analyst Michael Elliott maintained a Strong Buy rating on the financial stock after the earnings report. "Looking to 2024, SCHW remains in a strong liquidity position, and should continue to pay off short-term funding sources, helping net interest margin expand despite likely rate cuts and driving net interest income growth of 5% to 8%," Elliott wrote in a note to clients.
As for the major indexes, the Nasdaq Composite fell 0.6% to 14,855, the S&P 500 shed 0.6% to 4,739, and the Dow Jones Industrial Average gave back 0.3% to 37,266.
Related content
- Best Defensive ETFs to Protect Your Portfolio
- When Is the Next Fed Meeting?
- Flight Disruptions Continue As Winter Weather Wreaks Havoc
-
These Stocks Dipped in 2025. Do They Have Value?If you are looking to add new long-term positions to your portfolio, as you should, this is the time to examine stocks that the market shuns.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy InvestingInvesting in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Dow Adds 238 Points as UNH, CAT Pop: Stock Market TodayThe lack of a September jobs report didn't seem to worry market participants, with the data delayed due to the ongoing government shutdown.
-
Stocks at New Highs as Shutdown Drags On: Stock Market TodayThe Nasdaq Composite, S&P 500 and Dow Jones Industrial Average all notched new record closes Thursday as tech stocks gained.
-
S&P 500 Sees New Highs on Shutdown Day: Stock Market TodayMost of its components were in the red, but the S&P 500 Index still managed to hit a new intraday all-time high.
-
Stocks Close September on a High Note: Stock Market TodayA little bit of late risk-on behavior was enough to lift stocks into the green on the last day of September.
-
If You'd Put $1,000 Into Bank of America Stock 20 Years Ago, Here's What You'd Have TodayBank of America stock has been a massive buy-and-hold bust.
-
Investors Take Stock of Shutdown Talk: Stock Market TodayWhether we'll have a Jobs Friday this week depends on if we have a government shutdown in Washington.
-
If You'd Put $1,000 Into Oracle Stock 20 Years Ago, Here's What You'd Have TodayORCL Oracle stock has been an outstanding buy-and-hold bet for decades.
-
Dow Adds 300 Points, Ends Losing Streak: Stock Market TodayThe Dow, the S&P 500 and the Nasdaq head into the weekend on high notes after posting gains for the first time since Monday.
