Stocks Mixed as Retail Sales Drop Most in 10 Months

U.S. stocks again started the day mixed after a report said that U.S. retail and food services fell more than expected last month. Investors are also digesting a slew of quarterly earnings reports from banks, as JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) recorded income declines, while Wells Fargo & Company (WFC) said that profit jumped. 

The Dow Jones Industrial Average (DJIA) and the S&P 500 are poised to finish the week lower, while the Nasdaq may end up higher for the week. All three major indexes finished lower yesterday.

Retail and Food Sales Fall; Consumer Sentiment Report Forthcoming

Food and retail sales sank 1.9% in December, in the biggest drop in 10 months, the Census Bureau said. Economists had forecast a smaller decline of 0.1%. Excluding autos, sales fell 2.3% from November, compared to projections of a 0.1% gain.

Later this morning, the University of Michigan will release its Consumer Sentiment Index for January. Expectations are for a reading of 70.4, roughly even with the December data. The index is about 20% lower than its post-pandemic peak in April, in part due to consumer concerns about rising prices and the cost of housing.

Oil, Treasuries, Crypto

Oil prices fell after two days of gains amid fears of aggressive U.S. interest rate hikes, but the losses were cushioned by expectations of a strong economic recovery boosting demand in a tightly supplied market. Light sweet crude is now above $83 per barrel.

The yield on the 10-year U.S. Treasury note rose to 1.742%. The dollar was lower versus the euro. Bitcoin, Ether, and other cryptocurrencies fell again.

Other News: Raskin, SAP, Tesla

President Biden plans to nominate Sarah Bloom Raskin as the top Federal Reserve banking regulator. The President also plans to nominate two economists, Lisa Cook and Philip Jefferson, to fill out the Fed board.

Citigroup is selling its consumer banking businesses in Indonesia, Malaysia, Thailand, and Vietnam. This is the latest move by Citi to sell international retail operations to free up resources for wealth management and corporate business.

Bausch & Lomb is filing for an initial public offering. The eye-care company plans to raise $100 million in its IPO.

German software giant SAP SE (SAP) reported a 28% jump in fourth quarter cloud computing revenue. The company is targeting growth of 26% this year.

Tesla, Inc. (TSLA) will reportedly delay production of its Cybertruck until early 2023. The truck was originally announced in 2019, with a promise to begin production in late 2021. CEO Elon Musk says that Tesla will begin accepting Dogecoin for some purchases. The move sparked a 10% surge in Dogecoin and marks a return to accepting digital currencies for some payments.

Block, Inc. (SQ), formerly Square, intends to move forward with plans to build a Bitcoin mining system. The company says that the plan will make bitcoin "more distributed and efficient."

Ford Motor Company's (F) market value breached $100 billion for the first time, as more investors bet on the Detroit automaker's electric vehicle strategy. Ford is now worth more than its century-old rival General Motors Company (GM), which has a market cap of about $88 billion, but it is still dwarfed by electric vehicle leader Tesla, which has a market cap of over $1 trillion.

Energy drinks maker Monster Beverage Corporation (MNST) announced a $330 million deal to buy craft beer and hard seltzer producer CANarchy Craft Brewery Collective. The all-cash deal extends the trend of soft drink companies branching out to the alcohol space.

The Big Story: Energy Stocks Are Soaring

Shares of U.S. energy companies are soaring this year, driven by the shift to value stocks and the steep rise in oil prices. The energy sector is up over 14% this year, compared to a drop of 0.8% for the S&P 500. The energy sector also posted the biggest gains of any S&P 500 sector last year, rising nearly 48%. Crude oil prices are up about 23% since December and are hitting three-year highs.

S&P 500 energy companies are expected to increase revenue by 72% for the fourth quarter from a year ago, according to Refinitiv IBES. Oilfield firms Baker Hughes Company (BKR) and Schlumberger Limited (SCHL) report results next week.

The sector's outperformance also reflects a broader shift from technology and high-growth stocks and into value stocks. The S&P 500 growth index is down nearly 3% so far this year, while the S&P 500 value index—which is more heavily weighted in shares of energy firms, banks, and other economically sensitive and comparatively cheaper companies—has risen 1.5%.