Bonds rallied with consumer spending taking a dip, putting US retail sales under scrutiny. Stocks are struggling to hold onto their tech-driven gains, while oil prices surge due to increased US stockpiles. Read on to get your concise market analysis at CAPEX.com.
Bonds Rallied on Slower Spending
The North American bond market continued to rally yesterday after the retail sales figure reinforced the case for the Federal Reserve to cut interest rates in the second quarter. Treasuries rose (bond yields fell) as this report alleviated concerns in a market anxious about excessive spending, particularly after this week's inflation figure came in higher than anticipated.
US Retail Sales in Focus
US Commerce Department figures showed retail sales fell 0.8% last month, down from a 0.4% increase in December. This is due largely to a drop in revenue at auto dealerships and gas stations. Economists had forecast January data would be down 0.2%.
Rate-sensitive 2-year US Treasury yields fell around 5 bps following the release. In addition, the Fed swaps began to discount larger rate cuts in 2024 and fully discounted a rate reduction in June.
Stocks Battle to Maintain Rally Driven by Tech Giants
Stocks rose but were struggling to gain ground amid some stocks with losses in the most important sector of the S&P 500: technology.
Cisco Systems posted earnings for the latest quarter at the close of trading on Wednesday. The results came in better than estimates, but it lowered its full-year guidance and detailed plans to cut its global workforce as part of a broader restructuring push, sending shares down about 3% on Thursday.
Cisco daily chart, February 16, 2024. Source: CAPEX.com WebTrader.
Oil is on the Rise as US Oil Stockpile Grows
Oil continued to rise yesterday with gains of around 2%, but gains were capped by a monthly report from the International Energy Agency and a substantially larger-than-expected rise in U.S. inventories that was released. the previous day.
The IEA monthly report said global oil demand is showing signs of losing momentum. The IEA reduced its demand growth forecast for 2024 to 1.22 million barrels per day.
Meanwhile, U.S. Oil Inventories rose a staggering 12 million barrels in the week to Feb. 9th, far more than the 3.3 million barrel forecast. The large figure comes mainly from record production in the United States, indicating that the world's largest fuel consumer remained well supplied with oil.
It can be said that the only factor that maintains the price of oil at current levels is geopolitical.
Key Takeaways
- US Retail Sales figures fell 0.8% last month, showing less market spending.
- Cisco reported healthy earnings, but adjusted yearly plans which in turn brought its shares down 3%.
- Oil is bullish with around 2% gains.
- US Oil stock rose – number indicated 12 million barrels vs. The 3.3 forecasted.
Sources: Bloomberg, Reuters
