Blaming the retail sales number for the bad day ...lol Strong Retail Sales Report Weighs on Equities
05:07 PM EST, 11/16/2022 (MT Newswires) -- US stocks closed lower Wednesday after a stellar retail sales report reinforced the idea that the Federal Reserve has more work to do to cool overall demand.
The Nasdaq Composite fell 1.5% to 11,183.7, while the S&P 500 dropped 0.8% to 3,958.8. The Dow Jones Industrial Average closed 0.1% lower at 33,553.8. Energy, consumer discretionary and technology logged the biggest declines, while utilities and consumer staples saw gains.
In economic news, US retail sales rose more than expected in October, posting the biggest gain since February as spending at gasoline stations and auto dealers rebounded at the start of the holiday shopping quarter. Sales increased by 1.3% last month versus the consensus on Econoday for a 1% gain.
The strength in October suggests that real consumption is on track to increase by 3.8% in the fourth quarter, which would be the strongest quarter since the stimulus-fueled increase of over 12% in the second quarter of 2021, Jefferies said in a note. The firm's economists expect the Fed will increase interest rates by 50 basis points in December and February, followed by a 25-point rise in March.
Fed Governor Christopher Waller said Wednesday that data over the past few weeks has made him "more comfortable" considering a 50-point hike in December, though he warned "it is way too early to conclude that inflation is headed sustainably down."
"With policy already in restrictive territory, the federal funds rate can still be increased quite rapidly with several 50-basis-point increases, a pretty aggressive path for policy," Waller said.
US industrial production unexpectedly fell in October, dragged lower by utilities and mining. Industrial output ticked 0.1% lower last month versus the Street's view for a 0.2% increase.
Homebuilder confidence fell more than expected in November as elevated inflation and a 20-year high in mortgage rates stalled demand, according to a survey by the National Association of Home Builders and Wells Fargo.
The US 10-year yield slid 10.9 basis points to 3.69%, while the two-year rate was almost unchanged at 4.37%.
In company news, Target (TGT) reported mixed fiscal third-quarter results as higher sales were offset by a 49% decline in earnings that missed analysts' estimates. The retailer outlined a cautious near-term outlook as the key holiday shopping season picks up. Target shares plunged 13%, among the steepest decliners on the S&P 500.
The top performer on the index was TJX (TJX), up 5.2%, after the discount retailer posted better-than-projected fiscal third-quarter profit while revenue fell short of expectations. The TJ Maxx parent increased its US comparable-store sales outlook for the key holiday quarter and full year.
West Texas Intermediate futures fell 1.9% to $85.27 per barrel.
Gold was nearly unchanged at $1,777.3 per troy ounce, while silver was up 0.1% to $21.51 per ounce.
Price: 155.55, Change: +0.08, Percent Change: +0.05