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.
Sign up for Kiplinger’s Free E-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
-
Affordability Crisis: Florida Votes to Increase Property Tax BreakState Tax Property taxes have skyrocketed nearly 60% within the last five years in Florida, and its constituents are finally doing something about it.
-
Average Net Worth by Age: How Do You Measure Up?Financial advisors discuss the secrets to growing your net worth over time.
-
Stock Market Today: Stocks Are Positively Mixed to Open DecemberTechnology led the way Monday as two of the three main equity indexes closed higher.
-
Stock Market Today: Dow, S&P 500 Hit New Highs on Black FridaySentiment was bullish on the final trading session of November, with chip stocks leading the charge.
-
Stock Market Today: Stocks Stall on Tariff Talk, Inflation DataA slew of economic news and some tough posturing on trade put a damper on equities.
-
Stock Market Today: The S&P 500 Reclaims the 6K LevelInvestors see Scott Bessent as a safe shepherd of the economy as the president-elect burnishes his "Tariff Man" reputation.
-
Rivian Stock Gains as Georgia Plant Gets Conditional Funding: What to KnowIf Rivian's $6.6 billion government loan gets approved, it will support the construction of the EV maker's new production facility in Georgia.
-
Stock Market Today: Stocks Enjoy a Bessent BoostThe Dow closed at an all-time high as investors welcomed Donald Trump's Treasury secretary nominee.
-
Stock Market Today: The Dow Leads an Up Day for StocksBoeing, American Express and Nike were the best Dow stocks to close out the week.
-
Stock Market Today: Stocks End Higher in Whipsaw SessionThe main indexes were volatile Thursday with Nvidia earnings in focus.
