S&P 500 Rally Stalls Whilst Bonds Climb on Retail Sales – US Market Wrap

Wall Street traders positioning ahead of the key jobs report fueled a rally in Treasuries after weak retail sales strengthened the case for the Fed to cut interest rates this year. Even so, those expectations were not enough to push the S&P 500 to new all-time highs.

The yield on 10-year Treasuries fell to its lowest level in about a month, with money markets assigning slightly higher odds to three Fed rate cuts this year, while two are already fully priced in. Around 300 stocks in the US equity benchmark advanced, but the index slipped amid weakness in several technology names. A gauge of chipmakers declined, while an exchange-traded fund tracking software stocks gave back most of its earlier gains.

US retail sales unexpectedly stalled in December, signaling that consumers provided less momentum to the economy as the year came to a close.

Economists expect payrolls to rise by 65,000 in January, which would mark the strongest increase in four months. The unemployment rate is forecast to hold at 4.4%. The report will also include an annual revision to employment figures, which is expected to show a downward adjustment for the year through March 2025.

The S&P 500 fell 0.3%. Its equal-weighted version and the Dow Jones Industrial Average both closed at record highs. The Nasdaq 100 dropped 0.6%. The yield on 10-year Treasuries slid six basis points to 4.14%. The dollar wavered. Bitcoin fell below $70,000.