January 30, 2023

Dow futures fell 400 points after disappointing retail sales

Dow futures fell 400 points after disappointing retail sales

Stock futures fell sharply on Thursday after November retail sales fell more-than-expected, stoking fears that the Federal Reserve’s relentless interest rate hikes are tipping the economy into recession.

Futures contracts linked to the Dow Jones Industrial Average fell 402 points, or 1.17%. S&P 500 futures fell 1.4%, and Nasdaq 100 futures lost 1.7%.

Investors digested a disappointing retail sales report that suggested inflation was weighing on consumers. Retail sales fell 0.6% in November, according to the Commerce Department. That was less than the Dow Jones estimate of a 0.3% decline.

Treasury yields fell after the Fed’s latest rate hike, with the yield on the benchmark 10-year Treasury note dropping below 3.5%.

Tesla Shares fell more than 2% in the primary market after CEO Elon Musk sold part of his stake in the company.

The moves follow a bearish session on Wednesday when the Dow Jones fell 142 points, while the S&P 500 fell 0.61% and the Nasdaq Composite fell 0.76%.

Investors digested the Fed’s latest comments after a Boost your borrowing rate overnight. The central bank said it would continue to raise interest rates until 2023 and expected a higher-than-expected interest rate of 5.1%. With Wednesday’s rise of half a percentage point, the target range for rates is currently between 4.25% and 4.5%, the highest in 15 years.

Despite positive improvements such as modest growth, spending and production, Powell indicated that he is here to stay The job gains involved are very strong And the unemployment rate is very good for the Fed’s fight against inflation.

“People assume earnings will decline, but that’s how big and how fast it’s going — we think that’s where the surprise is,” Morgan Stanley’s Mike Wilson said Thursday on CNBC’s “Squawk Box.”

“It’s the negative operating leverage that we’re seeing from lower inflation…that’s going to hurt margins, and that’s regardless of whether or not there’s a recession,” Wilson added.