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Why Wall Street Fell Silent on Thursday Following Its Best Day Since November

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Why Wall Street stayed mute on Thursday after its best day since November

U.S. stock markets closed with minimal changes, pausing after witnessing the largest single-day percentage increase since November 6 on Wednesday, spurred by diminishing inflation and robust banking sector performances.

Investors appeared to overlook a disappointing increase in December’s retail sales and an unexpectedly high surge in weekly jobless claims.

The comprehensive S&P 500 index dipped by 0.21% to close at 5,937.34; the esteemed Dow Jones Industrial Average decreased by 0.16%, settling at 43,153.13; and the tech-heavy Nasdaq Composite dropped by 0.89% to finish at 19,338.29.

The yield on the benchmark 10-year Treasury note fell to 4.615% following comments from Federal Reserve Governor Christopher Waller and Chicago Fed President Austan Goolsbee, who both mentioned the possibility of further rate reductions this year.

Post the impressive job report on Friday, economists have adjusted their expectations regarding rate cuts for the year, with Bank of America suggesting that the cycle of rate cuts might have ended, and the next move could be a rate increase.

Bank Stocks Advance on Positive Earnings

Bank stocks continued their upward trajectory as more favorable earnings reports emerged.

Bank of America and Morgan Stanley outperformed analysts’ expectations for the fourth quarter, largely due to strong performances by their investment banking divisions. These reports followed similarly positive outcomes from JPMorgan, Goldman Sachs, Wells Fargo, and Citigroup earlier in the week.

According to Samer Hasn, a senior market analyst at global brokerage XS.com, the robust earnings from these financial institutions are currently fueling optimism about the resilience of U.S. companies and the broader economy in the face of higher interest rates.

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Key Stocks in Focus

  • Shares of UnitedHealthcare dropped after the company’s revenue fell short of quarterly expectations in its first earnings announcement since the untimely death of executive Brian Thompson.
  • TSMC reported a record quarter, propelled by advancements in AI technology, and projected continued growth. This news helped lift TSMC’s stock as well as other semiconductor stocks like Nvidia and Broadcom.
  • BP’s stock slightly rose after the petroleum giant announced plans to cut 4,700 internal and 3,000 contractor positions to reduce costs.
  • Despite raising its sales forecast for the fourth quarter, Target’s stock declined as concerns about profit margins lingered.
  • American Express experienced a modest drop in its stock price after agreeing to pay approximately $230 million in fines due to misleading practices in the sale of credit cards and wire services to small businesses.

Scrutiny on Trump’s Choice for Treasury

Scott Bessent, nominated by President-elect Donald Trump for the role of Treasury Secretary, faced rigorous questioning in the Senate. He advocated for tariffs, tax reductions, increased sanctions on Russian oil, and maintaining the Federal Reserve’s independence in policy-making.

Bessent also expressed skepticism regarding the necessity of a U.S. central bank digital currency, favoring the continued primacy of the U.S. dollar.

Bitcoin Surpasses Significant Threshold

Bitcoin soared past the significant $100,000 mark following rumors that Trump might establish a cryptocurrency reserve, though it had retracted slightly by day’s end.

Initially, Trump had considered a strategic reserve exclusively for Bitcoin, but recent reports suggest that this may now extend to include other cryptocurrencies such as Solana and XRP.

By the close of trading, Bitcoin had fallen by 0.25% to $100,184.70.

(This story has been updated with additional information.)

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