U.S. Stocks continued their upward trajectory on Monday, with the Dow Jones Industrial Average reaching a new record high, even as economic data released Tuesday showed a stall in retail sales. The Dow’s performance underscores a complex market narrative, balancing optimism fueled by recent tech gains against lingering concerns about the strength of consumer spending and the broader economic outlook.
At Thai time on Monday, the Dow Jones Industrial Average closed up 231.17 points, or 0.46%, at 50,367.04, marking a fresh all-time high. The S&P 500 rose 0.47% to end the day at 6,964.82, while the Nasdaq Composite gained 0.9% to close at 23,238.67. The Dow’s climb above 50,000, first achieved last week, signals continued investor confidence, though the gains have been unevenly distributed.
The positive momentum comes despite a disappointing retail sales report. The U.S. Commerce Department reported that retail sales were unchanged in December, a significant miss compared to analyst expectations of a 0.5% increase. November’s figures were revised down to a 0.6% increase. This stagnation raises questions about consumer resilience, a key driver of U.S. Economic growth.
The lack of retail sales growth is attributed to a combination of factors, including harsh winter weather and a resurgence of inflation. While inflation has cooled from its peak in 2023, it remains elevated enough to impact discretionary spending. Year-over-year, retail sales increased 2.4% in December, down from 3.3% in November, indicating a slowing trend.
Excluding volatile components like gasoline and automobiles, retail sales were also flat in December, following a 0.3% increase in November. This suggests the slowdown isn’t limited to specific sectors but is more widespread.
Investors are now keenly focused on upcoming economic data releases, particularly the January jobs report scheduled for Wednesday and the Consumer Price Index (CPI) report due on Friday. These reports will provide crucial insights into the health of the labor market and the trajectory of inflation, influencing the Federal Reserve’s monetary policy decisions.
Analysts predict the jobs report will show an increase of 70,000 jobs in January, a slight improvement from the 50,000 jobs added in December. The unemployment rate is expected to remain steady at 4.4%. However, the details within the report – wage growth, labor force participation rate, and industry-specific job gains – will be closely scrutinized for signs of weakening or strengthening in the labor market.
Beyond the jobs report, market participants will also be paying attention to the weekly jobless claims data released on Thursday and any commentary from Federal Reserve officials. These sources of information will be vital in assessing the Fed’s likely path for interest rates. The central bank has signaled a data-dependent approach, meaning its decisions will be heavily influenced by incoming economic indicators.
The recent rebound in technology stocks has been a significant contributor to the overall market gains. Nvidia and Broadcom led the charge on Monday, extending gains from the previous session with increases of 2.5% and 3.3%, respectively. Oracle also saw a substantial jump, rising 9.6% following an upgrade to a “buy” rating from D.A. Davidson, driven by optimism surrounding OpenAI and its related beneficiaries. Microsoft gained over 2%.
However, the tech sector’s recovery isn’t uniform. Monday.com experienced a sharp decline, falling over 20% after issuing revenue and profit guidance that fell short of Wall Street expectations. This highlights the sensitivity of tech stocks to earnings forecasts and the potential for volatility within the sector.
Alongside equities, gold and Bitcoin have also remained in focus. Gold futures rose back above per ounce on Monday, while Bitcoin hovered near . Both assets experienced significant declines last week, with Bitcoin suffering its largest daily drop since 2022 on Thursday, demonstrating their susceptibility to risk-off sentiment.
The market’s current positioning reflects a delicate balance between optimism and caution. Investors are encouraged by the Dow’s record-breaking performance and the rebound in technology stocks, but remain wary of potential headwinds from slowing retail sales, persistent inflation, and the uncertainty surrounding the Federal Reserve’s monetary policy. The upcoming economic data releases will be critical in shaping the market’s direction in the coming weeks.
The question now is whether the recent bounce-back has staying power. As one analyst noted, investors are weighing whether to capitalize on the gains or risk being caught in another downturn. The tech sector’s forward price-to-earnings ratio, having moved from a 17% premium to an 8% discount compared to its five-year average, suggests some valuation relief, but doesn’t guarantee sustained gains.
