Traders on the floor of the New York Stock Exchange (NYSE) in New York, on Tuesday, Jan. 3, 2023.
Michael Nagle | Bloomberg | Getty Images
Stocks fell Wednesday as Treasury yields tracked higher following the release of stronger-than-expected U.S. economic data.
The Dow Jones Industrial Average declined 94.45 points, or 0.25%, to close at 37,266.67. This marked the third straight day of losses for the 30-stock index. The S&P 500 slid 0.56% to close at 4,739.21, and the Nasdaq Composite lost 0.59%, ending the session at 14,855.62.
Charles Schwab shed 1.3% after reporting mixed quarterly results. Walgreens and Caterpillar both dropped about 3%, leading the Dow’s losses. Meanwhile, Boeing advanced 1.3%, making it one of the biggest gainers in the Dow after recent sharp losses.
Retail sales data for December came in stronger-than-expected, indicating a resilient consumer and putting aggressive rate cuts from the Federal Reserve into doubt. Retail sales were up 0.6% from November, and gained 0.4% month-over-month, excluding autos. Economists polled by Dow Jones had estimated a 0.4% month-to-month increase in retail sales and 0.2% ex-autos.
The 10-year Treasury yield was last trading nearly 4 basis points higher at 4.102%, continuing its rise from Tuesday after Federal Reserve Governor Christopher Waller warned easing monetary policy may come slower than anticipated.
So far, traders are pricing in a roughly 57% chance that the Federal Reserve begins cutting rates in March as hopes mount for a pivot, according to CME Group’s FedWatch tool.
“By the end of this year, rates will likely be lower than they are now — but it’s not going to be a straight line,” said Thomas Martin, senior portfolio manager at Globalt Investments.
“In the meantime, people who are positioned aggressively for more rate declines and for higher stocks, are maybe pulling in their horns and getting a little bit more diversified. You do want to hold bonds, but you also want to hold stocks,” added Martin.
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