Wall St ends lower, Treasury yields gain as strong data cools rate-cut hopes
Wall St ends lower, Treasury yields gain as strong data cools rate-cut hopes
NEW YORK (Reuters) -U.S. stocks followed their European counterparts to a lower close on Wednesday and U.S. Treasury yields resumed their uphill climb as robust economic data chilled bets that the Federal Reserve could begin reducing its policy rate as early as March.
All three major U.S. indexes finished the session lower, with interest rate-sensitive momentum stocks weighing heaviest on the tech-heavy Nasdaq.
The prospect of forestalled rate cuts helped U.S. Treasury yields build on recent gains.
The Commerce Department's December retail sales report painted a portrait of a healthy consumer - responsible for about 70% of the U.S. economy - who has been able to weather the dual storms of hot inflation and restrictive monetary policy.
"We had news that the U.S. consumer continues to be quite healthy, but that has increased anxiety that the Feds first rate cut could potentially be pushed to May from March," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. "Yields are moving higher on the strong retail sales numbers as well, adding to near-term worries."
At last glance, financial markets are pricing in a 53.8% probability of the Fed cutting its key policy rate by 25 basis points in March, down from 63.l% on Tuesday, according to CME's FedWatch tool.
