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Stronger than expected economic indicators dash hopes for aggressive Fed action<\/p>\n\n\n\n
By Karen Langley<\/a><\/p>\n\n\n\n Jan. 17, 2024 4:45 pm ET<\/p>\n\n\n\n U.S. stock indexes fell deeper into negative territory for 2024 as investors dialed back their expectations for how quickly the Federal Reserve might start cutting interest rates.<\/p>\n\n\n\n Retail sales rose a seasonally adjusted 0.6%<\/a> in December from a month earlier, according to data released on Wednesday, a larger increase than economists expected. The sign of economic strength could lessen the chance that central bank officials will cut interest rates as much as markets had previously expected, some investors said.<\/p>\n\n\n\n \u201cThe hopes are waning that we\u2019re going to see aggressive rate cuts,\u201d said Dan Genter, chief executive and chief investment officer at Genter Capital Management. \u201cPeople were talking about six rate cuts during the year. The numbers aren\u2019t there to really justify it.\u201d<\/strong><\/p>\n\n\n\n The S&P 500 fell 0.6% while the Dow Jones Industrial Average slipped 0.3%, or about 94 points. The tech-heavy Nasdaq Composite declined 0.6%. The S&P 500 is down 0.6% in 2024, while the Dow and Nasdaq are off 1.1% and 1%, respectively. <\/p>\n\n\n\n The yield on the benchmark 10-year U.S. Treasury note, meanwhile, rose to 4.103%, its highest 3 p.m. level in more than a month, from 4.064% on Tuesday.<\/p>\n\n\n\n Higher yields tend to weigh on stock prices. They give investors options for earning returns at a lower risk than in the stock market. <\/strong>They <\/strong>also reduce the worth of companies\u2019 future cash flows in calculations that are commonly used to determine the value of a stock.<\/p>\n\n\n\n The declines were broad-based, with all 11 sectors of the S&P 500 trading lower. All but one of the so-called Magnificent Seven tech stocks retreated, with <\/p>\n\n\n\n Tesla<\/a><\/p>\n\n\n\n shares falling 2%, <\/p>\n\n\n\n Amazon.com<\/a><\/p>\n\n\n\n shares dropping 0.9% and Class A shares of Google parent <\/p>\n\n\n\n Alphabet<\/a><\/p>\n\n\n\n losing 0.7%. Shares of <\/p>\n\n\n\n Meta Platforms<\/a><\/p>\n\n\n\n added 0.2%.<\/p>\n\n\n\n Traders on Wednesday lowered the probability they assigned to the Fed\u2019s having cut interest rates from current levels by its March meeting, according to CME Group\u2019s FedWatch tool.<\/p>\n\n\n\n Fed governor Christopher Waller said Tuesday<\/a> that a continued decline in inflation would allow the central bank to cut interest rates this year. But as long as labor markets and economic activity are solid, he saw \u201cno reason to move as quickly or cut as rapidly\u201d as in previous rate-cutting cycles.<\/p>\n\n\n\n \u201cYou can drive a truck through the spread between what the market expects and what the Fed is telegraphing,\u201d said Hans Olsen, chief investment officer at Fiduciary Trust, an asset management firm and private bank based in Boston. \u201cThe data is suggesting that perhaps the Fed is more right than the market.\u201d<\/p>\n\n\n\n What are the largest banks on Wall Street expecting for the stock market and the U.S. economy in 2024? WSJ\u2019s Dion Rabouin digs into predictions from firms like Deutsche Bank, Citi, JPMorgan and Wells Fargo to explain what they see on the horizon. Photo illustration: Carlo Allegri\/Reuters\/Storyblocks<\/p>\n\n\n\n Among individual stocks, shares of <\/p>\n\n\n\n Spirit Airlines<\/a><\/p>\n\n\n\n slumped 22%, after a 47% decline Tuesday. A federal judge blocked a plan<\/a> by <\/p>\n\n\n\n JetBlue Airways<\/a><\/p>\n\n\n\n to buy Spirit for $3.8 billion.<\/p>\n\n\n\n Investors turned to the safety of some traditionally defensive stocks, including food makers and healthcare companies. <\/p>\n\n\n\n J.M. Smucker<\/a><\/p>\n\n\n\n shares rose 2%, <\/p>\n\n\n\n Campbell Soup<\/a><\/p>\n\n\n\n gained 1.3% and <\/p>\n\n\n\n Humana<\/a><\/p>\n\n\n\n added 2%.<\/p>\n\n\n\n Overseas, the Stoxx Europe 600 fell 1.1%. In Asia, Hong Kong\u2019s Hang Seng Index dropped 3.7% to its lowest closing value since October 2022 after weak economic data<\/a> in China.<\/p>\n\n\n\n <\/p>\n\n\n\n Quoted from The Wall Street Journal: Stronger than expected economic indicators dash hopes for aggressive Fed action By Karen Langley Jan. 17, 2024 4:45 pm ET U.S. stock indexes fell deeper into negative territory for 2024 as investors dialed back their expectations for how quickly the Federal Reserve might start cutting interest rates. Retail sales rose a …<\/p>\nClick Here To View The Full Article<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"