Dow Hits Record High Despite Cautious Economic Data

• Consumer spending in the U.S. unexpectedly flattened in December. 
• Eight of 13 retail sectors posted declines, including clothing stores, furniture outlets, and auto dealerships.
• The employment cost index increased 0.7% in the fourth quarter.

U.S. stock markets opened with gains on Tuesday, pushing the Dow Jones Industrial Average to an all-time high, as investors appeared to shrug off retail concerns in favor of broader market optimism. 

At the time of writing, the Dow Jones Industrial Average (DJI) traded 0.5% higher, at 50,430 points. Meanwhile, the S&P 500 (SPX) edged up to 6,966 points. However, the Nasdaq Composite (COMP) inched 0.1% lower.

Retail Data 

Consumer spending in the U.S. unexpectedly flattened in December. According to the Commerce Department, overall retail purchases, unadjusted for inflation, showed little change following a 0.6% gain in November. 

Eight of 13 retail sectors posted declines, including clothing stores, furniture outlets, and auto dealerships, while spending rose at building materials and sporting goods stores.

Data released Tuesday also showed labor costs rising more slowly. The employment cost index increased 0.7% in the fourth quarter, according to the Bureau of Labor Statistics.

Market Selloff Over AI Fears 

Shares of many established software and technology companies fell sharply last week as traders grew increasingly uneasy about the risk that advances in artificial intelligence could erode demand for traditional subscription software.

The selloff intensified after Anthropic’s Claude Cowork launch. Cowork includes open-source tools that let AI systems handle entire tasks on their own. 

Following this, hedge funds aggressively increased their short positions in U.S. equities as well. Data from Goldman Sachs Group (GS) showed that last week’s notional shorting of single stocks reached the highest level since 2016.

However, a Morgan Stanley research team led by Michael Wilson noted that market pullbacks are a normal feature of major investment cycles and said the long-term fundamental tailwinds for AI remained strong. 

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up by 0.2%, the Invesco QQQ Trust ETF (QQQ) gained 0.2%, and the SPDR Dow Jones Industrial Average ETF Trust (DIA) increased 0.7%.

Also See: This Software Company Saw Significant High-Value Client Additions And An Upbeat Q4 – Stock Shot Up 17% Pre-Market Today

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Share

·

Add us on