The broad indices ended with losses, while the KBW Bank Index I:BKX rose 0.5% to 66.78, with all but eight of the index components ending with gains.
Thursday's economic news was also mixed. The Census Bureau reported that U.S. retail sales during November rose 0.7% from October to $432.3 billion. The increase was higher than the consensus estimate of a 0.6% increase among economists polled by Reuters. November's retail sales were up 4.7% from a year earlier. The Census Bureau also made an upward revision to their October retail sales growth figure, showing an increase of 0.6% from September, when the original estimate was an increase of 0.4%.
Excluding auto sales, retail sales in November were up 4% from October to $349.0 billion. Economists on average had expected these sales to increase by just 0.2%.
Also on Thursday, the Labor Department said first-time U.S. unemployment claims for the week ended Dec. 7 rose by 68,000 to 368,000, from the previous week's revised upwardly revised figure of 300,000. Economists had expected initial claims for last week to come in at 330,000, reflecting typical holiday season volatility.
The continuing increase in retail sales, along with last week's huge revision of estimated third-quarter U.S. gross domestic product growth to an annual rate of 3.6% from the previous estimate of 2.8%, along with decline in the unemployment rate to 7% in November from 7.3%, will all be factored into the discussions of the Federal Open Market Committee when it meets on Dec 17-18.
A bull market can easily be spooked by fears of higher interest rates, and the Federal Reserve will eventually slow its massive "QE3" balance sheet expansion, that has been meant to hold long-term rates down. The central bank has been making net monthly purchases of $85 billion in long-term U.S. Treasury bonds and agency mortgage-backed securities since September 2012.
According to Sterne Agee chief economist Lindsey Piegza, the November retail sales growth in part reflected a "temporary reprieve from pump prices," as well as the rise in home prices and the bull market for stocks. However, Piegza still sees consumers "losing momentum with growth falling from a peak of near 9% in 2011."
"Consumers will need sustained job creation and income growth, which unfortunately do not go hand in hand," Piegza wrote in a client note on Thursday. She predicted last week that the improved GDP and unemployment rate wouldn't be enough for the Fed to decide to taper bond purchases in December.