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Market absorbs the grim U.S. retail sales numbers and is waiting for the next clue
Wall street numbers were seen to be jolted on Thursday amid low retail sales data release. The S&P 500 declined quite a bit during the day as at February 14, 2019, and finally ended the day 0.3% down from the previous close marking the first decline in 5 days after the ongoing trade war related move between U.S.-China provided some signs of respite to the market. The index earlier extended its gains over the statement made by the U.S. President Donald Trump. The president said that he could let the March 1st deadline go past without raising tariffs if a real deal can be made between two major economies. The statement provided an impetus to the investors that the action will improve the economic conditions of both the countries and in turn, will provide support to the ongoing global economic slowdown, and it marked a rise across various global exchanges. However, the latest data posted by the U.S. Census Bureau shunned all the expectations away and brought a fall in the S&P 500 and other major indices. The S&P 500 fell and closed at 2745.73 down 0.3% from its previous close. The DJI (Dow Jones Industrial Average) was also down 0.41 % to 25439.39.Â
U.S. Retail Sales Data (Source: U.S. Census Bureau)
As per the retail sales data for December, the U.S. retail sales fell and marked a move of 1.2% in the downward direction from its previous value and jolted the market and shunned the hopes of the investors away. This raised concerns on the prevailing sentiment on the U.S. economy that was earlier thought to likely recover fast; and in turn exerted the pressure on the major indices. The slowdown and the reported numbers may be likely to reinforce the FED case for being patient with an interest rate hike. In fact, the numbers were quite debilitating as market expected a marginal rise instead of any drop and the situation now has casted doubts on the positive sentiments about the economy.
Another event that impacted the market sentiment came into limelight was the news that U.S. President Donald Trump will sign a spending bill to keep the U.S. government open. The market quickly reacted and recovered but the gains were soon capped by his plans to declare a national emergency to bypass Congress and secure funds for his border wall.
During the first blood bath in 5 days, the consumer staples and financial sectors were the biggest decliners, down over 1% each, while real estate sector gained ground and was up about 0.5%. From company specific news, American International Group (AIG) was among the top losers, shedding 9% after the group declared a fourth-quarter loss amid market volatility. Amazon shares also saw a dip with company-led strategic announcements. Centurylink Inc also sailed in the same boat but with an immense loss as the stock plunged heavily on the benchmark index post the announcement on slashing of the dividends by more than half. While these came in as headline company news updates, stocks in the Asia region were also seen to be bearing the brunt. But the situation was not the same all over â some U.S. stocks in the energy sectors, for instance, benefitted from the oil prices while the overall sentiment was on the negative side.
Not just the equity market was quick to respond to the events, the fixed market also reacted with the yield on the U.S.-10-year bond falling by 5.2 bps (Basic points) to 2.650% shunning away the previous gains. The yield on U.S.-2-year bond was down 3.7 bps to 2.494%. The dollar index was down 0.1% to 97.04; thus depicting the impact on the currency market as well.
However, globally the investors are eyeing on the development of U.S.-China trade talks to gauge the direction of the market further and to evaluate the extent of the global slowdown caused by the U.S.-China trade war.
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