Market Wrap for Thursday, January 3: Rally Erased Following Fed Minutes
U.S. markets were modestly positive in the early afternoon Thursday, but moved into the red after the minutes from the Fed's last meeting were released.
The Dow Jones closed down 11.69 points while the S&P 500 dropped 3.09 and the Nasdaq closed down 11.69.
There were a lot of retail stocks moving on Thursday after companies reported their same-store sales numbers, giving investors a look at how the 2012 holiday shopping season panned out.
Target (NYSE: TGT) shares rallied as much as three percent, despite the fact that the company reported flat sales, less than the 1.3 percent that was anticipated. Macy's (NYSE: M) beat expectations, but tumbled after the company cut its guidance and said it would close five stores.
Shares of The Gap (NYSE: GPS) were up over two percent after the company reported a same-store sales increase of five percent, more than the 3.6 percent that was expected.
- Retail Sales Roundup January 3, 2013
- Macy's to Close Five Stores After Lowering Guidance
- Are Retail Stocks a Value Play or Value Trap?
Overall, December looked to be a fairly strong month for auto sales in the U.S., continuing a rebound seen in the sector over the past few months. Total vehicles came in line with expectations at 15.3 million. Domestic vehicle sales were better than expected, at 11.97 million -- more than the 11.70 million that was anticipated.
GM (NYSE: GM) and Ford (NYSE: F) shares rallied on Thursday, as both companies beat expectations. Toyota (NYSE: TM) and Honda (NYSE: HMC) saw their shares slump as the companies reported weak sales relative to the consensus estimates. (See: December Auto Sales Roundup: Ford, GM Up on Sales Beat)
Investors got some glimpses of the state of U.S. jobs situation on Thursday. ADP Nonfarm Employment Change beat expectations at 215,000 jobs -- the consensus estimate was for 133,000. Challenger Job Cuts, a measure of the number of layoffs, declined by 22.1 percent from the prior year.
However, jobless claims came in slightly worse than expected, with initial jobless claims rising to 372,000 -- more than the 355,000 expected.
In terms of the broader market direction, the most single important factor on Thursday was the release of the minutes from the FOMC's last meeting. Following that release, markets lost all their gains and traded into the red.
The Fed's minutes revealed that "several" members of the Fed believed that the bank would have to raise interest rates before the end of 2013. Higher rates could limit stock gains.
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Shares of GameStop (NYSE: GME) plummeted on speculation that Sony's (NYSE: SNE) next PlayStation would include technology to prevent gamers from playing used games. (See: Five Reasons Why PlayStation 4 Will Play Used Games)
Herbalife (NYSE: HLF) shares rallied almost 13 percent after The Wall Street Journal reported that fund manager Robert Chapman had taken a stake in the MLM company, arguing that hedge fund magnate Bill Ackman would fail in his quest to take down the company.
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