Stocks Rallied Hard Wednesday on Bank Earnings and Mild CPI; Thursday Setting Up a Bit More Calm; Gold, Silver, Oil Also Big Winners

Earnings for the biggest U.S. banks continue to roll out with positive results for the fourth quarter of 2024. Thursday morning saw reports from Bank of America (BAC), Morgan Stanley (MS), PNC (PNC), and US Bankcor (USB), all of which featured earnings beats and generally glowing quarterly results.

Despite the positive news in the financial sector, banks which reported this morning haven't quite caught fire with traders. Bank of America is flat pre-market, US Bancor actually missed EPS estimates and is down 2.5%, and PNC, despite a huge beat, is down around three percent, roughly the same as it was up during yesterday's rally. Morgan Stanley is up more than two percent prior to the open.

Taiwan Semi (TSM) is getting good vibes after another knockout quarter, setting new records with a 57% profit surge to $11.4 billion and a 39% revenue hike to $26.88 billion. Shares are boosted more than five percent an hour prior to the opening bell. United Health (UNH) beat on the earnings side, but revenues took a hit. The stock is being punished to the tune of a four percent decline.

Retail sales for December were modest, up 0.4%, and up 3.9 percent from December 2023. Total sales 2024 were up 3.0 percent from 2023 according to the U.S. Census Bureau, which supplied the report.

There might be some hangover from Wednesday's surge in stock prices. Futures have been trending down most of the morning, with Dow futures in the red by more than 100 points. S&P and NASDAQ futures are clinging to small gains after the retail sales report didn't move the needle much.

The big winners Wednesday outside of stocks were crude oil, gold, and silver. WTI crude hit a high of $79.15 just as the stock market closed and has dipped back down to $78.40. Gold advanced through the day Wednesday, starting from a low of $2,673.80 to close out in New York at $2,722.20 and is moving higher Thursday morning, at $2,742.50. That's a $69 move in just more than a day on the COMEX. Silver's move was even more pronounced, starting from a low of $30.20 at 12:30 am ET Wednesday, this morning topping out at $31.98.

Bond traders got some relief from the dovish inflation figures, sending note yields lower. The benchmark 10-year yield dropped from 4.78% to 4.66%, and the drops on shorter maturities (2-year out to 7-year) were in the same ballpark, the 7-year falling by 15 basis points.

It remains to be seen if Wednesday's big move in stocks will carry over to the rest of the week. From the looks of the futures, the rally appears to have lost some of its mojo. There's still some apprehension concerning the regime change in Washington to take place on Monday. Biden out, Trump in, seems like a no-brainer, but those with less itchy trading fingers may still be taking a wait-and-see approach.

Thursday, Friday and most of Monday remain under the inauguration cloud. With CPI out of the way and the upcoming FOMC meeting likely to produce a pause in the rate cutting rigamarole, things could calm down a bit.

Thursday's rally did manage to put the majors back on a positive footing for January, but they remain below levels from early December. There's still time to get stocks moving forward and put a positive spin on January, which would be important as many a trader believes that the first month foreshadows the rest of the year.

At the Close, Wednesday, January 15, 2025:
Dow: 43,221.55, +703.27 (+1.65%)
NASDAQ: 19,511.23, +466.84, (+2.45%)
S&P 500: 5,949.91, +107.00, (+1.83%)
NYSE Composite: 19,422.71, +246.06 (+1.28%)