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Nasdaq Index, Dow Jones, S&P 500 News: Investors Eyeing Retail Sales, Fed Policy

By:
James Hyerczyk
Published: Jan 17, 2024, 10:40 UTC

S&P 500 outlook hinges on 0.3% predicted rise in December retail sales, signaling potential shifts in Federal Reserve rate cut expectations.

S&P 500 Index, Dow Jones, Nasdaq-100 Index

In this article:

Key Points

  • Stock Futures Decline Ahead of Key Retail Data
  • Retail Sales to Influence Fed Policy Decisions
  • Mixed Earnings Reports Reflect Market Uncertainty

Stock futures pointed to a continued downturn in Wednesday’s premarket trading, extending the previous session’s losses amidst an active fourth-quarter earnings season. This trend reflects investor caution, with retail sales data anticipated to provide further clarity.

At 10:09 GMT, benchmark S&P 500 Index futures are trading 4777.50, down 21 or -0.44%. Blue chip Dow Jones Industrial Average futures are at 37414.00, down 139.00 or -0.37% and the tech-heavy Nasdaq-100 is trading 16869.75, down 96.75 or -0.57%.

Retail Sales Report: A Crucial Indicator for Fed Policy

Today at 13:30 GMT, financial markets await the U.S. retail sales report with Goldman Sachs forecasting a 0.3% increase in core retail sales for December, slightly higher than the consensus. This data is critical for evaluating consumer spending and its influence on the Federal Reserve’s monetary policy, which directly affects the volatility of risky assets like stocks.

Goldman Sachs notes important consumer trends, including physical store performance and the ongoing effects of COVID-19. They also anticipate a 0.6% rise in total retail sales, likely to impact both the market and the Fed’s policy decisions. A strong report indicating robust consumer spending could lead to a delay in Fed rate cuts, thereby influencing investor attitudes towards riskier investments.

Overnight Mover: Interactive Brokers’ Mixed Results

Interactive Brokers’ stock dipped nearly 3% following a mixed earnings report, highlighting the ongoing challenges in the financial sector. The company beat revenue expectations but missed on earnings per share, reflecting mixed signals in the market.

Corporate Earnings and Valuation Concerns

As firms like Charles Schwab report earnings, NYU’s Aswath Damodaran warns of potential market overvaluation. These corporate results, alongside retail sales data, will provide crucial insights into market health and valuation.

Forecast: Assessing Uncertainty in Fed Decisions and Retail Sales Impact

The immediate market forecast is closely tied to the anticipated U.S. retail sales report and its potential to reshape expectations around the Federal Reserve’s rate cut timing.

If the report shows stronger-than-expected consumer spending, it could lead to a reevaluation of the timeline for Fed rate cuts, possibly delaying them. This scenario could introduce volatility into markets, particularly in riskier asset classes.

Conversely, if retail sales fall short of forecasts, it might accelerate the Fed’s monetary easing, offering a different set of challenges and opportunities for investors.

Given these factors, market participants should remain vigilant, as today’s retail sales data is expected to be a significant influence on both market trends and Federal Reserve policy decisions in the short run.

Technical Analysis

Daily E-mini S&P 500 Index

The E-mini S&P 500 Index, currently at 4777.75, is trading lower. The current price is positioned above both the 200-day moving average of 4504.59 and the 50-day moving average of 4674.41, indicating an overall bullish trend.

The pivotal level of 4808.25, which aligns with the minor resistance, is key for determining short-term market direction. Staying above this level may reinforce bullish sentiment, while a decline below could signal short-term bearish tendencies.

The market’s position above both moving averages, coupled with its reaction to the pivot point, suggests a cautiously optimistic outlook. However, a sustained move under 4808.25 will indicate increasing selling pressure, which will put the 50-day moving average within striking distance.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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