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US stocks fell on Wednesday as investors took in strong retail sales data.
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Holiday spending was stronger than expected, with retail sales rising 0.6% in December.
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All three benchmark indexes ended the day lower, while bond yields climbed.
US stocks fell and bond yields rose on Wednesday as traders took in strong economic data that further complicates forecasts for speedy rate cuts from the US central bank.
Major indexes ended lower as data showed holiday spending was stronger than expected, helping to drive a 0.6% jump in retail sales in December, above the 0.4% increase economists were expecting. The 10-year Treasury yield rose three basis points to 4.104%.
Robust consumer spending has helped buoy the US economy for the past year, keeping GDP growth strong despite tightening financial conditions.
The fresh data could put pressure on the Fed to keep monetary policy tight, as central bankers are looking for the US economy to show signs it’s cooling off and inflation is decisively falling. Consumer Price Index data showed inflation accelerated more than expected in December, with inflation rising 3.4% year-over-year.
“This level of spending does not indicate any consumer retrenchment and puts further pressure on the Federal Reserve to remain hawkish. Good times economically speaking may be painful for the rate doves positioning, who had collectively expected a slowing economy to propel the Fed into sooner rate cuts. We aren’t there just yet,” GAM Investment’s Charles Hepworth said on Wednesday.
Investors are now pricing in a near-100% chance the Fed will keep rates unchanged at its next policy meeting, up from a 90% chance priced in a month ago. But markets are still anticipating aggressive rate cuts by the end of the year, with a 35% odds that the Fed will cut rates by 150 basis-points, according to the CME FedWatch tool.
Here’s where US indexes stood at the 4 p.m. closing bell on Wednesday:
Here’s what else is going on:
In commodities, bonds, and crypto:
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