2023-10-17 23:01:44
US retail sales support the interest rate hike…and stocks decline slightly
US retail sales continued to recover, exceeding analysts’ expectations, in a new indication that fears of the largest economy in the world entering a recession have faded, paving the way for the Federal Reserve to raise interest rates, if it wants, at its next meeting, which caused pressure on US stocks in Tuesday’s trading. Although it is a bit tight.
At the end of trading on the second day of the week, and following strong increases the previous day, the Dow Jones Industrial Average and S&P 500 were close to the point at which they began the day, while the Nasdaq index lost a quarter of a percentage point from its value at the beginning of the day.
Two weeks following recording the highest level since 2007, the yield on ten-year US Treasury bonds returned to the level of 4.86%, as retail sales data showed the continued strength of the US economy, despite the repeated rate hikes, which may support the Federal Reserve’s tendencies to continue imposing its strict policies for some. the time. Bond yields fell to 4.83% before the end of the session.
The rise in bond yields has weighed on the broader market in recent weeks, as traders weigh the prospects of a longer-than-expected Federal Reserve policy tightening, and investors also take into account the potential impact of the war between Israel and the Palestinian resistance on the global economy.
Chris Zaccarelli, chief investment officer at the Alliance of Independent Advisors, said in an interview with CNBC Economics: “The bond market is leading the stock market at this stage, and there appears to be a repeat of the movements that we witnessed over the past two months.” . “A strong start to the third-quarter earnings season helped ease concerns somewhat,” other analysts said.
Today, Tuesday, the US Department of Commerce said that retail sales rose by 0.7% during the month of September, which exceeded the Dow Jones index estimate of 0.3%, driven by gas station sales, which alone rose by 0.9%, with the rise in global oil prices, and then oil prices. Fuel at American stations.
In Europe, stocks fell on Tuesday, as a series of pessimistic forecasts for corporate profits and rising government bond yields overshadowed gains in energy stocks, and a slight decline in risks resulting from the conflict in the Middle East. The STOXX 600 index ended today’s trading down 0.1%.
“This gives a picture of markets betting that this conflict will not get much worse,” said Daniela Hathorne, senior market analyst at Capital.com.
She added, “American diplomacy will play its role, which will make the conflict local and under tight control, and thus will not affect larger markets.”
The declines were led by the construction and raw materials sector, which fell by 0.9%. The rise in euro zone bond yields further pressured stocks following US retail sales came in higher than expectations.
While geopolitical tension captured the market’s attention, investors’ focus remained on the comments of monetary policy officials, searching for indicators of the monetary policy directions of the major central banks during the coming period. Shares of energy companies rose 0.3%, tracking the rise in crude oil prices.
Oil prices rose today, Tuesday, ahead of US President Joe Biden’s visit to the Middle East, during which he is likely to seek a balance between providing support for Israel and trying to prevent any escalation in the region due to the war with the Palestinian resistance.
After falling by more than a dollar yesterday, Monday, Brent crude futures rose 25 cents, or 0.28%, to reach $89.90 per barrel upon settlement, and US West Texas Intermediate crude rose to $86.66 per barrel upon settlement.
The two benchmarks rose last week due to fears of a widening conflict in the Middle East, with Brent crude rising 7.5%, the highest weekly gain since February.
Edward Moya, chief market analyst at OANDA, said: “Oil prices are fluctuating as energy traders await whether American diplomatic efforts will succeed in preventing the conflict between Israel and the Palestinian resistance from escalating and turning it into a broader war in the region.”
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