The S&P 500 dipped on Thursday, pulled down by dismal quarterly results and increasing Treasury rates following data indicating a still-hot job market. This is anticipated to have the Fed thinking hawkish with the rates. Approximately 190,000 people applied for unemployment benefits in the week ending January 14th, far fewer than the 214,000 predicted by experts. The lowest level since April.
US retail sales statistics for December dropped to its lowest month-over-month level in a year, while PPI data revealed more promising signals that inflation is waning. The markets opted to place greater emphasis on the negative economic signal telegraphed by the poor statistics.
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The sentiment also worsened with the remarks of the Fed’s greatest hawk, James Bullard, that the central bank should raise interest rates above 5% before reacting to data. As markets continue to be sensitive to new data, traders will aim at the US GDP on Thursday.
The S&P 500 declined 0.7%, the Dow Jones Industrial Average sank 0.7%, and the Nasdaq Composite declined 0.96%. The Nasdaq has seen the weakest increase of the three indexes over the past several months and remains vulnerable to news of a recession in 2023. Netflix is expected to disclose less-than-impressive numbers for the fourth quarter.
Selling the greenback appears to be the common move
The dollar declined on Thursday as a flood of data continued to indicate that the US economy was decelerating. The dollar lost 0.4% versus the yen to 128.455 yen in afternoon trade, a day after the BOJ decided to maintain its ultra-loose monetary policy.
The euro rose 0.4% versus the dollar closing around $1.0831. Yesterday, EUR/USD marked a nine-month high of $1.089. The dollar index, which measures the value of the US dollar relative to a basket of other currencies, was recently up 0.3% at 102.04.
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The Aussie fell 0.4% as Australia reported an unexpected drop in employment in December. NZD/USD followed into the red with a 0.7% decline.
Commodities like the weaker dollar
On Thursday, the gold price reverses two days of declines and creeps higher. The price of silver is recouping some of Wednesday’s losses after a trading day was defined by a lower US dollar and a pessimistic market sentiment. The XAG/USD rose 1.6% to $23.849. XAU/USD rose a similar 1.45% to a shiny $1932.
Oil prices finished more than 1% higher on Thursday, continuing a recent surge fuelled by increased Chinese demand. The market also counted in a second consecutive week of significant increases in US oil inventories.
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Brent crude prices increased $1.18, or 1.4%, to $86.16 per barrel, while US West Texas Intermediate crude futures stayed 70 cents above $80 up 1.25%. Both futures closed at their best levels since December 1st.
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