US equities broadly pull back as rate cut bets wither, S&P 500 sheds over half a percent
18.01.2024, 00:02

US equities broadly pull back as rate cut bets wither, S&P 500 sheds over half a percent

  • Investors pulled back from US indexes on Wednesday.
  • US Retail Sales beat expectations, firm economy limits rate cut odds.
  • US benchmarks declined as investors trim rate-cut bets to 57% in March.

US stocks saw broad-base declines on Wednesday after investors were forced to adjust their bets on rate cuts from the Federal Reserve (Fed) after US Retail Sales rose more than expected, implying the US domestic economy remains too strong for the US central bank to begin cutting their main reference rate as soon as investors are hoping for.

Money markets have trimmed their bets of the first rate cuts from the Fed as soon as March, with markets seeing 57% odds of a rate cut, down steeply from over 70% just a month ago. Investor odds of a March rate cut have declined steeply with no material policy changes or announcements from the Fed other than regular appearances from Fed officials routinely warning markets that expectations of rate cuts have run far ahead of what’s logically possible.

US Retail Sales rose by 0.6% in December compared to the median market forecast of 0.4% and stepped well over November’s 0.3% print. Investor hopes of a quickening pace of rate cuts from the Fed hinged on deteriorating consumer conditions within the US, and good news for the economy has become bad news for markets with all focus and hopes pinned on cheaper loans.

The Dow Jones Industrial Average fell a quarter of a percent, closing down 94.45 points at $37,266.67 with the NASDAQ Composite shedding 88.72 points to close down nearly 0.6% at $14,855.62. The Standard & Poor’s 500 (S&P) major equity index also fell 0.56%, closing down 26.77 points at $4,739.21.

S&P 500 Technical Outlook

The S&P 500 tumbled to a fresh weekly low of $4,714.37 on Wednesday before recovering back towards the 200-hour Simple Moving Average (SMA) near $4,750.00.

Despite near-term declines, the S&P 500 remains well-bid on the daily candlesticks, within touch range of new all-time highs beyond the major $4,800.00 barrier.

The S&P 500 remains up over 15% from late October’s last significant bottom near $4,102.02.

S&P 500 Hourly Chart

S&P 500 Daily Chart

S&P 500 Technical Levels

 

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