Stocks Sway Amid Economic Data and Earnings Reports

U.S. stocks saw modest declines as investors evaluated corporate earnings and economic data. A positive inflation report and strong bank earnings provided some market stability. However, concerns linger over potential tariffs from the incoming administration and Federal Reserve rate-cutting strategies.

U.S. stocks showed modest declines on Thursday, fluctuating between small gains and losses following a significant surge in the prior session. Investors closely monitored the latest corporate earnings and economic data, looking for indications of the Federal Reserve's potential rate cuts. A favorable inflation report eased fears about resurgent price pressures, while robust bank earnings contributed to the largest one-day percentage gain for the three major U.S. indexes since November 6.

Economic indicators on Thursday revealed that consumer spending remains strong, bolstering the labor market. This provides the Federal Reserve with a buffer to proceed cautiously in trimming interest rates this year. Rick Pitcairn, chief global strategist at Pitcairn, noted the market's relief but highlighted the uncertainty surrounding January's outcomes as investors anticipate further data insights.

Strong earnings reports from banks, highlighted by Morgan Stanley's 2.73% advance, have instilled some market confidence, supported by a steepening yield curve. In contrast, Bank of America experienced a 1.93% dip. Meanwhile, market reactions are also attuned to comments from Fed Governor Christopher Waller, indicating possible sooner-than-expected rate cuts due to easing inflation, which helped reduce Treasury yields.

(With inputs from agencies.)