Traders on the floor of the New York Stock Exchange (NYSE) in New York, on Tuesday, Jan. 3, 2023.
Michael Nagle | Bloomberg | Getty Images
The S&P 500 slipped Wednesday, as Treasury yields tracked higher following the release of stronger-than-expected U.S. economic data.
The broad market index slipped 0.5%. Meanwhile, the Dow Jones Industrial Average traded near the flatline. The tech-heavy Nasdaq Composite lost 0.8%.
Charles Schwab shed nearly 3% after reporting mixed quarterly results. Intel and Caterpillar both declined around 3%, leading the Dow’s losses. Meanwhile, Boeing gained 1.6%, making it the biggest gainer in the Dow after weeks of heavy losses.
Retail sales data for December came in stronger-than-expected, indicating a resilient consumer and putting aggressive rate cuts from the Federal Reserve into doubt. Retail sales were up 0.6% from November, and gained 0.4% month-over-month excluding autos. Economists polled by Dow Jones had estimated a 0.4% month-to-month increase in retail sales and 0.2% ex-autos.
The 10-year Treasury yield was last trading nearly 6 basis points higher at 4.121%, continuing its rise from Tuesday after Federal Reserve Governor Christopher Waller warned easing monetary policy may come slower than anticipated.
So far, traders are pricing in a roughly 60% chance that the Federal Reserve begins cutting rates in March as hopes mount for a pivot, according to CME Group’s FedWatch tool.
“By the end of this year, that rates will likely be lower than they are now — but it’s not going to be a straight line,” said Thomas Martin, senior portfolio manager at Globalt Investments.
“In the meantime, people who are positioned aggressively for more rate declines and for higher stocks, are maybe pulling in their horns and getting a little bit more diversified. You do want to hold bonds, but you do want to hold stocks,” added Martin.
Traders also weighed weaker-than-expected China GDPÂ data that were released overnight.
