Close this search box.

Unexpected Surge in Retail Sales Jolts Wall Street, Shakes Rate Cut Hopes

Market Update - Daniel Ang The Accidental Trader Traders Academy International 8

📉 Wall Street Dips: Retail Sales Spur Economic Optimism
🌍 Currency Shifts: Dollar Index Edges Up, Mixed Forex Movements
🛢️ Commodity Fluctuations: Oil Prices Wobble, Gold Dives Amid Rate Cut Speculation

In a remarkable twist that caught Wall Street off guard, U.S. retail sales for December outstripped expectations, suggesting a more robust economic footing than previously anticipated. According to the Commerce Department’s Census Bureau, retail sales, a crucial barometer of consumer spending, climbed by 0.6% in December following a steady 0.3% rise in November. This outcome, surpassing the forecasted 0.4% increase, has led economists to revise upward their projections for Q4 2023’s economic growth. Consequently, this has cast shadows over the previously anticipated Federal Reserve interest rate cuts in March.

In a direct reaction to this development, major stock indices retreated. The Dow Industrial Average slipped by 94.45 points, a 0.25% decline, to settle at 37,266.67. The S&P 500, not far behind, fell by 26.77 points, translating to a 0.56% decrease, ending at 4,739.21. The Nasdaq Composite, meanwhile, faced the most significant relative loss, dropping 0.59% or 88.73 points.

The foreign exchange market witnessed modest fluctuations. The Dollar Index saw a marginal increase of 0.03%. Notable currency pairs like the EUR/USD inched up by 0.06% to 1.088, while the USD/JPY pair rose significantly by 0.65%, reaching 148.19. The GBP/USD pair also saw an uptick, trading higher by 0.36% at 1.2681.

Commodities experienced a mix of trends. West Texas Intermediate (WTI) crude oil, after an initial dip, managed to close higher at $72.56 per barrel, a 0.22% increase. This rebound was largely attributed to supply concerns stemming from ongoing tensions in the Middle East. Conversely, Brent crude settled at $77.88 per barrel, down by 0.52%.

Gold prices, in the meantime, plunged to a more than one-month low, dropping 1.1% to $2,005.70 per ounce. This decline is primarily linked to fading expectations of an imminent interest rate cut by the Federal Reserve in March.

In the cryptocurrency realm, the sector is currently in a state of recalibration following the recent approval of Bitcoin ETFs. Bitcoin (BTC/USD) has been relatively stable around the $42,000 mark. The initial excitement surrounding the ETF approvals has given way to a more reflective phase in the cryptocurrency market.

Overall, the day’s trading session has been a blend of surprises and recalibrations across various markets, reflecting the dynamic and interconnected nature of global finance.

more insights