Stocks had a slow start Thursday as investors took in an onslaught of economic data and corporate earnings reports. However, momentum built as the session wore on, with all three indexes ending the day comfortably higher.
At the close, the Dow Jones Industrial Average was up 0.9% at 38,773, the S&P 500 was 0.6% higher at 5,029, and the Nasdaq Composite had gained 0.3% to 15,906.
On the economic front, a disappointing retail sales reading was front and center. Specifically, data from the Census Bureau showed retail sales unexpectedly fell 0.8% from December to January. The retail sales figures for both November and December were revised lower, as well.
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"The January retail sales report showed a surprising slowdown in sales growth during the month," says Sam Millette, director of fixed income for Commonwealth Financial Network. While weather likely played a factor in the disappointing results, "the slowdown in sales is a sign that the economic momentum from the end of 2023 may be starting to fade."
Indeed, after the data were released, the Atlanta Federal Reserve lowered its first-quarter gross domestic product (GDP) forecast to 2.9% from 3.4%.
Also in focus were initial jobless claims, which fell to a one-month low of 212,000 last week – signaling continued strength in the labor market.
"Jobless claims continue to surprise to the downside despite an uptick in layoff announcements from major companies," says Alex McGrath, chief investment officer for NorthEnd Private Wealth. "One has to wonder if we are in a situation where we are trying to hold the ball under water until it eventually explodes to the upside."
Today's data did little to move the needle on expectations for potential rate cuts from the Federal Reserve. According to CME Group's FedWatch Tool, futures traders are pricing in a 61% chance the Fed will cut rates by a quarter of a percentage point in May and a 54% probability for one in June – both roughly the same as Wednesday.
Twilio, Cisco sink after earnings
In single-stock news, Twilio (TWLO) spiraled 15.4% after the cloud communications firm reported its fourth-quarter results. TWLO disclosed earnings and revenue that came in above analysts' estimates, but its forecast for first-quarter revenue was lower than what Wall Street was anticipating.
Elsewhere, Cisco Systems (CSCO) fell 2.4% after the networking equipment specialist's weak fiscal third-quarter and full-year guidance overshadowed top- and bottom-line beats for its fiscal Q1. The company also hiked its quarterly dividend by 3% and said it is laying off 5% of its global workforce, or more than 4,000 positions.
Buffett trims Apple stake, boosts Chevron and Occidental
Apple (AAPL) was another notable decliner, slipping 0.2% after a regulatory filings revealed Warren Buffett sold 10 million shares of the Dow Jones stock in the fourth quarter. AAPL is still by far the largest position in the Berkshire Hathaway equity portfolio, with a roughly 50.2% weighting.
On the buy side of the ledger, Buffett & Co. notably increased stakes in energy stocks Chevron (CVX, +3.4%) and Occidental Petroleum (OXY, +4.9%). Here, we feature the full list of the stocks Buffett bought and sold in Q4.
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