Stocks move higher while digesting economic prints, earnings

Stock market indexes (^DJI, ^IXIC, ^GSPC) are moving higher in the green an hour ahead of Thursday's closing bell as markets digest this week's economic data, including this morning's declining retail sales print. Yahoo Finance dwells on the latest economic commentary from Allianz Chief Economic Advisor Mohamed El-Erian and what to take away from earnings results.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

JULIE HYMAN: All right, let's get you up to speed on the market action here as we see all three major averages near their highs of the session and once again holding above this 5,000 level that we have been at for most of the week here, with the exception of the sell-off that we saw on Tuesday.

Right now, the Dow gaining almost 320 points. That's good for 8/10 of 1%. The S&P up a half a percent and the NASDAQ up a fifth of 1%. So big tech actually lagging today. It is energy, real estate, and materials as well as financials that are helping push markets higher here, even after we got some disappointing data on the retail-sales front this morning. And we're sort of in a vacuum in between the biggest of earnings reports. So we should say, as we look at the backdrop, investors' hopes for a soft landing and interest-rate cuts further complicated this morning by that falling retail sales number.

Mohamed El-Erian, Allianz chief economic advisor and president of Queens College Cambridge, said those figures were a yellow signal for the most optimistic economic projections. At the same time, he said it's also important to listen to corporate commentary to help decipher where the economy is heading.

MOHAMED EL-ERIAN: Companies are at the forefront, and they have a much better sense of what's going on the ground at turning points.

14 months ago, most people were thinking the US were going to fall into recession. The companies were saying, our businesses are strong. So in order of forward looking, nothing beats what companies tell you.

JULIE HYMAN: Unfortunately, my friend, what companies are telling us is not crystal clear, to be sure. We've got sort of a mixed picture in terms of what companies are saying about end-market demand, for example.

JOSH LIPTON: Yeah, I mean, I think Mohamed is absolutely right. Listen, you want to listen to economists and strategists, and we talk to smart ones every day on this show. But to your point, Julie, it is-- you want to listen to the men and women who are actually running companies. What do they say about customers and demand and businesses? It is hard to get a firm read, though, if you're looking for one narrative-- and we've talked about this-- on the consumer or China. It can be tough. It depends on the company and the sector.

Here's one stat for you I thought was interesting, though, not just what companies are saying about what's happening now but, of course, you always listen very carefully about what's coming. And here's a fact courtesy of FactSet saying the percentage of companies, Julie, issuing negative EPS guidance for Q1 so far is 71%, and that is above the five-year average and the 10-year average, well above both.

Now, it is not unusual that you would hear a CEO or CFO kind of sound conservative about the outlook, but what this is telling me, at least so far this earnings season, they're sounding more conservative relative to consensus than even is historically typical.

JULIE HYMAN: Yeah, that's very interesting. I mean, there was also the commentary from CEO Chuck Robbins of Cisco whose numbers disappointed investors. And on the conference call, he said in terms of the macro environment, "We are seeing a greater degree of caution and scrutiny of deals given the high level of uncertainty. As we're hearing this from our customers, it's leading us to be more cautious with our forecasts and expectations."

So that was interesting. Part of that has to do with inventory build up. Cisco a networking-equipment maker. You know, we are hearing more positive comments from other sectors of the economy that perhaps are more consumer based, for example, in some instances.

JOSH LIPTON: Travel has been strong, relatively.

JULIE HYMAN: Travel, exactly. And obviously on the tech front, we're seeing redeployment to AI from other areas as well, even as overall enterprise spend doesn't seem to have taken a huge step backwards at least, even if there's some of the caution like Robbins is indicating.

JOSH LIPTON: Yeah, and Cisco-- and that's a great segment to pull out because you pay attention to Cisco because they are a tech bellwether because Chuck Robbins is selling all around the world to a lot of different kinds of companies and customers. So when he points out weakness, people pay attention.

It is, you know, on-- you can't blame the CEO or the CFO for sounding cautious here when you think about the seat they're in and, as they look ahead here, just the range of potential challenges that we talk about. Rates, inflation, election, geopolitics, it's a lot. And so for them to look ahead and try to make sense of where things are going, not easy in this environment.

JULIE HYMAN: No, definitely not.