Stocks were moving lower in afternoon trading Wednesday, as investors digested data that showed that showed the U.S. economy is in need of more stimulus. Energy prices were steady after rising sharply the day before, due to the frigid weather that’s impacted much of the U.S.
The S&P 500 index was down 0.5% as of 12:06 p.m. Eastern, dragged down by technology and industrial companies. The Dow Jones Industrial Average fell 27 points, or 0.1%, to 31,495 and the technology-heavy Nasdaq was down 1.3%.
Two stocks in the Dow that were helping the index were Verizon Communications and Chevron. Warren Buffett’s Berkshire Hathaway investment company announced it made significant new investments in those companies.
The Commerce Department said U.S. retail sales soared a seasonally adjusted 5.3% in January from the month before. It was the biggest increase since June and much larger than the 1% rise Wall Street analysts had expected. The jump was largely driven by the $600 stimulus checks that went out to most Americans in late December and early January. The data shows that recession-hit Americans are eager to spend cash on necessities, and aren’t saving the funds — which is the goal of stimulus checks.
It potentially means that additional stimulus, likely in the form of $1,400 checks in the $1.9 trillion stimulus plan, will likely provide a necessary boost to the economy. Optimism that Washington will come through on trillions of dollars of more aid for the economy and encouraging company earnings reports have helped stocks grind higher this month, along with hopes that the coronavirus vaccine rollout will set the stage for stronger economic growth in the second half of this year.
“We’re keeping this economy humming despite the last several weeks, which have been really challenging,” said Katie Nixon of Northern Trust. “That’s notable, it’s a clue to what will happen if we get an additional stimulus package.”
Later Wednesday investors will be looking over minutes from the Federal Reserve’s last policy meeting, held in January. It will be a chance to see what the central bank expects for inflation.
The yield on the 10-year Treasury slipped back to 1.28% from 1.29% late Tuesday, the highest level in a year.
AP Business Writer Ken Sweet contributed.