Stocks dropped sharply on Tuesday as investors realized a higher probability of a 0.5% rate hike in the March FOMC meeting. In addition, the latest earnings from retailers such as Walmart and Home Depot added disappointment with worries on weakening earnings forecast on the horizon.
This is sufficient to wipe out all gains for Dow and put the index into the red territory for the year. The 10-year Treasury yield hit nearly 4%, adding pressure to Nasdaq.
💰Economic data showed resilience🍏
The latest S&P 500 Global Flash Composite Output Index that helps to track the manufacturing and service sectors saw it hit a high of 50.2, underpinning the strong demand for services even as manufacturing still shows signs of weakness. It should not be surprising given that we also saw a solid retail sales of 3% rise in January last week, exceeding the 1.7% expectation.
This points to the Fed having more groundwork for dampening economic demand; thus, robust data might be bad news for the equity market.
📮What’s on the menu today?📊
The key highlight for today will be the FOMC minutes which will be released at 3 am. This will shed light on FOMC members’ inclination on the pace of rate hikes and assessment of the general economy.
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