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Morgan Stanley ( MS ) up after higher Q4 profits

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UnitedHealth ( UNH ) falls on missing quarterly sales estimates

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Investors parse retail sales, jobless claims data

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Indexes off: Dow 0.16%, S&P 0.21%, Nasdaq 0.89%

(Adds trading volume, prices)

By Chuck Mikolajczak

NEW YORK, Jan 16 (Reuters) - U.S. stocks dipped on

Thursday as a jump in the prior session cooled, while investors

eyed the most recent corporate earnings and gauged economic data

to determine the path of Federal Reserve rate cuts.

A benign reading on inflation calmed fears about a renewal

in price pressures and strong bank earnings helped the three

major U.S. indexes notch their biggest one-day percentage gain

since Nov. 6 on Wednesday.

But stocks swayed between modest gains and losses on

Thursday after economic data on Thursday indicated consumer

spending remains strong, while the labor market is also on solid

footing, giving the Fed room to maintain a slow pace in cutting

interest rates this year.

"The market breathed a pretty good sigh of relief

yesterday. Now January's undecided, but at least on a little bit

better footing to see where we end up, and we can look at some

more data and some earnings and see how that's all going to turn

out," said Rick Pitcairn, chief global strategist at

Philadelphia-based Pitcairn.

"The bank earnings have been strong, and those are

bellwether earnings, and to the extent that you've got a

steepening yield curve, you've got some strong earnings come out

of the banks, they're looking forward and not talking their

numbers down. The market's taken a little courage from that."

Morgan Stanley ( MS ) advanced 4.03% after the lender said

earnings increased in the fourth quarter, propelled by a wave of

dealmaking, while Bank of America ( BAC ) shares declined 0.98%.

The country's second-largest bank predicted higher interest

income in 2025.

The Dow Jones Industrial Average fell 68.42

points, or 0.16%, to 43,153.13, the S&P 500 lost 12.57

points, or 0.21%, to 5,937.34 and the Nasdaq Composite

lost 172.94 points, or 0.89%, to 19,338.29.

Investors also focused on comments from Fed Governor

Christopher Waller, who said the central bank could cut rates

sooner and faster than expected as inflation is likely to

continue to ease, which helped push Treasury yields lower.

The yield on the 10-year Treasury note was last

down 3.8 basis points (bps) to 4.615% and rate futures were

pricing in a greater chance for the Fed to cut rates by at least

25 bps at the central bank's May meeting.

Stocks have struggled following a post-U.S. election rally,

with the S&P 500 falling in four of the previous five weeks, but

are on pace currently for a weekly gain. A resilient economy,

nagging inflation and comments from Federal Reserve policymakers

have fanned worries about the central bank being less aggressive

in cutting interest rates than previously anticipated.

Concerns linger about potential tariffs from

President-elect Donald Trump, scheduled to take office on

Monday, that would further stoke inflation.

Trump's pick for Treasury Secretary, Scott Bessent, said the

dollar should remain the world's reserve currency, the Federal

Reserve should stay independent, and that he is ready to impose

tougher sanctions on Russia's oil sector, while warning of an

"economic calamity" if Trump's 2017 tax cuts expired at the end

of this year.

UnitedHealth ( UNH ) fell and weighed heavily on the Dow,

accounting for just over 201 points to the downside after the

health insurer reported fourth-quarter revenue below estimates.

The Nasdaq was dragged lower in part by a 4.04% drop in

Apple ( AAPL ) after data from research firm Canalys showed the

iPhone maker was overtaken as China's biggest smartphone seller

in 2024 by rivals Vivo and Huawei.

Advancing issues outnumbered decliners by a 1.81-to-1

ratio on the NYSE, and by a 1.07-to-1 ratio on the Nasdaq.

The S&P 500 posted 21 new 52-week highs and nine new lows,

while the Nasdaq Composite recorded 58 new highs and 101 new

lows.

Volume on U.S. exchanges was 14.31 billion shares, compared

with the 15.75 billion average for the full session over the

last 20 trading days.