- Goldman beats forecasts, but shares
- Citigroup earnings miss estimates
- Best Buy plunges after same-store sales decline
- Jobless claims inch lower, better than forecasts
Dow Jones: -0.38%
S&P 500: -0.27%
US markets opened lower on Thursday with the S&P 500
pulling back from a record high as investors showed caution on a busy day for corporate earnings.
Banking heavyweights Goldman Sachs and Citigroup were both trading in the red after the opening bell, while Best Buy dampened sentiment in the retail sector after a surprise decline in same-store sales over Christmas.
Meanwhile, investors were also reacting to a slightly more-than-expected decline in claims for unemployment benefits. "[The data] could rekindle speculators fears that the Fed could speed up the tapering process when the Federal Open Market Committee two-day meeting gets underway on the January 28th," said Alex Conroy, Financial Trader at Spreadex.
The S&P 500 was trading 0.3% down early on after hitting a fresh all-time high of 1,848.38 on Wednesday. The index also set a new intraday record of 1,850.84 during yesterday's session.
Economic data, Fed in focus
US consumer prices rose by 1.5% in December, up from 1.2% the previous month and in line with analysts' expectations.
Initial jobless claims fell by only 2,000 to 326,000 in the week ended January 11th, the Labor Department revealed separately, lower than the 328,000 claims predicted.
According to James Paulsen, Chief Investment Strategist at Wells Capital Management, a possible rise in money velocity - the rate at which the money supply is turned over via transaction - this year could have an impact on the Federal Reserve's monetary easing programme.
"Even though the Federal Reserve has started to taper its quantitative easing programme, should velocity unexpectedly rise it may not be able to taper fast enough to keep growth in the US money supply from accelerating," he wrote in the Financial Times today.
Outgoing Fed Chairman Ben Bernanke will speak in Washington this afternoon which could offer some insight into the central bank's next move. Fed official John Williams will also speak in Washington.
Goldman, Citigroup in focus
Goldman Sachs beat estimates with a less-than-expected 19% drop in fourth-quarter net income to $2.33bn, or $4.60 a share, from $2.89bn, or $5.60 a share, the year before. This exceeded analysts' forecast of $4.18 a share, as equity underwriting revenue doubled and the firm reduced compensation costs. However, the stock was down over 1% early on.
Citigroup fell after missing forecasts despite fourth-quarter net income more than doubling to $2.69bn from $1.2bn a year earlier. Excluding accounting charges and special items, adjusted profit was 82 cents a share, missing the 95 cents estimate.
Best Buy's shares plunged by nearly a third after posting a unexpected 0.8% fall in same-store sales in the nine weeks ended January 4th despite heavy discounting over the festive period, with domestic same-store sale falling 0.9%. Analysts had predicted 0.5% growth.