Markets Weighed Down By Tech Weakness
• US stocks fell Thursday. The move lower was driven by large technology companies which underperformed on the second-to-last day of the week. Growth-oriented companies, which often tend to be in the technology space, come under pressure when rates rise.
• Given rising inflation and a hawkish Federal Reserve, many investors expect benchmarks like the US 10-year Treasury yield to move closer to 2% in the coming months. If this happens and debt costs become more expensive, future cash flows of high-flying companies will be eroded, making them less attractive investments.
• Wall Street didn't love what it saw on the economic data front Thursday. Another inflation report showed that the December producer price index rose 9.7% year over year, the highest record since 2010. Meanwhile, initial jobless claims came in at 230,000 for the week ending January 8. This was higher than economists' original projections of 200,000, further souring sentiment on the Street.
What to Be on the Lookout for Today
• December retail sales following the holiday shopping period will be released. For a quick preview, Mastercard’s (MA) in-store and online sale data tracking suggests retail closed out 2021 on a high note.
• Later in the morning, the Fed will announce industrial production for December. The Import Price Index and business inventories will also hit the market, as will the University of Michigan’s preliminary Consumer Sentiment Index for January.
• Earnings season is in focus as well with a host of reports from big banks. JPMorgan Chase (JPM) will host a conference call to outline its Q4 and full-year earnings. Analysts increased their earnings estimates for the company last week, with J. Mitchell upping expectations from $14.90 per share to $15.04 for the year. Wells Fargo (WFC), Citigroup (C), First Republic Bank (FRC), and BlackRock (BLK) also report.
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