The New York stock market fell on news of a strong increase in retail sales on a disappointing fourth quarter outlook for retail giant Target.
In the New York Stock Exchange (NYSE) on the 16th (US Eastern time), the Dow Jones Industrial Average 30 closed at 33,553.83, down 39.09 points (0.12%) from the battlefield.
The Standard & Poor’s (S&P) 500 index closed at 3,958.79, down 32.94 points (0.83%) from the previous day, and the Nasdaq closed at 11,183.66, down 174.75 points (1.54%).
Investors focused on retail sales, Target’s performance and geopolitical tensions.
The target was announced on the same day as its third quarter net profit was down 50% from the same period last year.
Not only did the company’s net profit fall well below market expectations, but investor sentiment was soured as the company expected a low-single-digit percentage decline in same-store sales in the fourth quarter.
“Customer shopping is increasingly affected by inflation, interest rates and economic uncertainty,” said Target CEO Brian Cornell.
Target stock plunged more than 13%.
However, October retail sales published on the day increased by 1.3% from the previous month, turning from the previous month’s flat level to an upward trend.
Treasury yields rebounded briefly on brisk retail sales, then fell again.
As the 10-year US Treasury yield dipped below 3.7% at one point, the spread between 2-year and 10-year Treasury bonds widened further.
Concerns about an economic recession have intensified as the yield inversion intensified, with the 10-year yield falling below the 2-year yield.
The fact that Micron Technology, the US semiconductor company, has announced that it would reduce the supply of memory chips and further reduce its spending plans is also putting pressure on the market.
Micron stock fell more than 6%.
All indicators except retail sales were slow.
The National Association of Home Builders (NAHB), which shows the reliability of home builders, showed a housing market index of 33 in November, a decline for 11 consecutive months.
Import prices in October fell 0.2 percent from the previous month, the fourth consecutive month of decline since July.
Fed officials continued to insist that the pace of rate hikes could be moderated, but that the tightening stance should continue.
At the regular meeting of the Federal Open Market Committee (FOMC) in December, Christopher Waller, the director of the Fed, said that he had an open stance on raising interest rates by 50 basis points, but insisted that additional indicators be checked.
The President of the Federal Reserve Bank of San Francisco (Fed) Mary Daly predicted that the final interest rate of the United States would reach 4.75% to 5.25% in this cycle.
He also argued that stopping increases in interest rates is not the subject of discussion at the moment, and that the discussion is now about slowing down and where there is a sufficiently restrictive interest rate level.
Kansas City Fed President Esther George said it was too soon to say when the Fed would stop raising rates.
Goldman Sachs raised the Fed’s final rate range from 4.75% to 5.0% to 5% to 5.25%.
After raising the interest rate by 0.50 percentage points in December, it is expected that interest rates will be raised by 0.25 percentage points each in February, March and May next year.
Geopolitical tensions over the Polish missile attack that affected markets the previous day were eased after the tentative conclusion that the strikes were caused by Ukrainian air defense missiles launched to intercept Russian cruise missiles.
The price of Bitcoin fell by about 1.5% while watching the trend of the FTX cryptocurrency exchange event.
The price of Ethereum also fell by more than 3%.
Following FTX, cryptocurrency lending firm Genesis Trading temporarily suspended new loans and redemptions, and earlier reports that another lending firm BlockFi was preparing to file for bankruptcy came out, further dampening cryptocurrency-related investor sentiment.
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Within the S&P 500 index, stocks related to energy, consumer discretionary, technology, materials (materials), and real estate fell, while stocks related to utilities and consumer staples rose.
Among individual stocks, the stock price of Lowe’s, which sells home materials, rose more than 3% on the announcement of better-than-expected earnings.
Shares in cruise operator Carnival fell more than 13% after announcing it would issue $1 billion in convertible bonds as part of its refinancing plan next year.
Kohl’s shares fell more than 7% following Target’s earnings warning.
New York stock market experts expected stock price volatility to continue as the possibility of an economic recession grows despite expectations of easing inflation.
“There is definitely an expectation that inflation has really peaked, and central bank hawkishness has peaked,” Thomas McGarity, head of equity at RBC Wealth Management, told the Wall Street Journal.
However, he said volatility was likely to continue given the growing risk of a global recession next year, “We’re not quite out of the woods yet,” he said.
Brian Levitt, global market strategist at Invesco, told CNBC that Target’s earnings and retail sales warnings were at odds, signaling a slowdown in consumption.
“Tighter monetary policy will make people less wealthy, which will slow down consumption and ease inflation,” he said.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) recorded 24.11, down 0.43 points (1.75%) from the battlefield.
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