Dow Jones Drops as UnitedHealth Misses Revenue; S&P 500 Steady Before Retail Sales

Stock Futures Steady as Investors Weigh Earnings, Retail Sales in Focus

Stock futures were little changed Thursday after Wall Street’s strongest session since November. A rally driven by softer inflation data and strong bank earnings lifted the S&P 500 and Nasdaq Composite, but the Dow Jones Industrial Average lagged due to a sharp drop in UnitedHealth shares. S&P 500 and Nasdaq 100 futures edged up 0.2% and 0.3%, respectively, while Dow futures fell 94 points, or 0.2%.

How Did Bank Earnings Lift Broader Markets?

Banks were a key driver of Wednesday’s rally, with strong earnings reports boosting sentiment. Bank of America reported a 47% profit increase, with investment banking fees surging 44% amid robust deal-making. Net interest income also exceeded forecasts, rising 3% to $14.5 billion. Similarly, Morgan Stanley’s earnings of $2.22 per share crushed expectations of $1.70, supported by a 51% jump in equities trading revenue and a rebound in investment banking activity.

These results, alongside beats from JPMorgan Chase and Goldman Sachs earlier in the week, highlighted the sector’s resilience despite a challenging environment.

Why Is the Dow Lagging Despite Market Optimism?

The Dow underperformed as UnitedHealth Group, a key component of the index, fell over 4% following its mixed earnings report. While the company delivered adjusted earnings of $6.81 per share, above the $6.72 forecast, revenue came in at $100.81 billion, missing estimates of $101.76 billion. A shortfall in premium revenue, which totaled $76.48 billion versus the expected $78.18 billion, contributed to the decline.

As one of the highest-weighted Dow stocks, UnitedHealth’s drop exerted significant pressure on the index, overshadowing gains from other components.

How Are Inflation and Treasury Yields Shaping Sentiment?

Wednesday’s rally was supported by a softer inflation reading, with December’s core consumer price index rising 3.2% annually, slightly below the expected 3.3%. Core inflation rose just 0.2% monthly, easing concerns about aggressive Federal Reserve policy. Treasury yields tumbled, with the 10-year yield falling to 4.667%, before inching higher Thursday as investors awaited fresh economic data.

What’s Next for Markets?

Traders are focused on December retail sales, expected to rise 0.5%, down from 0.7% in November, as well as weekly jobless claims data. These reports will offer key insights into consumer spending and labor market conditions, critical drivers of economic momentum.

The Federal Reserve’s next meeting, scheduled for late January, looms large over the markets. While inflation trends suggest rates will remain steady, investors are watching closely for signals of potential shifts in monetary policy.

For now, a divergence between the major indexes highlights the importance of earnings and sector-specific performance, as UnitedHealth’s weakness counterbalances optimism from tech and financials. Traders will watch whether strong data and upbeat corporate results can sustain the recent rally or if concerns about economic growth will cap gains.

More Information in our Economic Calendar.