Traders work on the floor of the New York Stock Exchange during afternoon trading on January 17, 2024 in New York City.
Michael M. Santiago | Getty Images News | Getty Images
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What you need to know today
Dow falls three days
The blue-chip Dow Jones Industrial Average fell for the third straight day Wednesday. Wall Street’s other two main indexes also dropped as better-than-expected retail sales data helped lift Treasury yields. In Asia, China stocks hit five-year lows, while Hong Kong stocks rebounded. Sectoral declines were led by mining stocks.
Strong retail sales
U.S. retail sales came in higher than expected for the last month of 2023 in a sign that holiday shopping picked up. Retail sales for December increased 0.6% vs. the 0.4% rise expected in a Dow Jones estimate. The rise was driven by clothing, accessories and online shopping.
Dimon in Davos
JPMorgan Chase CEO Jamie Dimon was one of the more highly anticipated guests at the World Economic Forum in Davos, Switzerland. Dimon discussed a variety of topics ranging from financial to geopolitical risks. He was also seen praising former U.S. President Donald Trump’s stance on the U.S. economy, immigration and taxes.
Singapore minister face corruption charges
Singapore Transport Minister S Iswaran resigned as he faces corruption charges, the first for a cabinet minister in the island country. He pleaded not guilty to 24 charges of obtaining gratification as a public servant, two charges of corruption and one charge of obstructing the course of justice.
[PRO] Citi says how to invest in the next AI boom
Citi says it is definitely “not too late” for investors to invest in the “exponential growth” of AI technology. And after Nvidia sparked the AI boom, soaring over 200% last year, the investment bank now names its top plays for 2024.
The bottom line
It’s only the third week of the new year and markets are slowly heading into a cycle of good data being received as bad news — at least from an equity standpoint.
Treasury yields, however, have risen this week boosted by comments from Federal Reserve Governor Christopher Waller on Tuesday. The yield on the benchmark 10-year Treasury note continued to trade higher Wednesday, crossing the 4% mark on the back of better-than-expected U.S. retail sales for December.
The data showed American consumers somewhat loosened their purse strings in the last month of 2023. But for Wall Street, that was hardly any reason to celebrate based on how aggressively markets have been pricing in interest rate cuts by the Federal Reserve.
Waller’s comments on Tuesday at Davos about the U.S. central bank taking its time to cut rates this year, came as a sharp contrast to markets expecting the Fed’s first rate cut of 2024 to come as early as March.
“The Fed was already hammering away on its ‘no rush to cut rates’ message, and today’s stronger-than-expected retail sales won’t give them any reason to change their tune,” said Chris Larkin, managing director of trading and investing for E-Trade from Morgan Stanley.
About 55% of traders tracked by the CME Group’s FedWatch tool expect a 25 basis point rate cut in March, falling from 63% a day earlier.
