Higher Rates Worries Resurfaced After Retail Sales Data

Barry Adams
17 Oct, 2023
New York City

Stocks on Wall Street headed lower after interest rate and inflation worries resurfaced. 

Retail and food services sales unadjusted for inflation rose 0.7% from the previous month and advanced 3.8% from the previous year in September from an upwardly revised 0.8% increase in August. 

The retail sales are adjusted for seasonal and calendar changes but not adjusted for price changes or inflation. 

Retail trade sales were up 0.7% from August, and up 3.0%  above last year and nonstore retail sales were up 8.4% and food services  and drinking places sales were up 9.2% from a year ago respectively. 

The hotter-than-expected retail sales data lifted 10-year U.S. Treasury yield to 4.80% and the yield hovered near 16-year high.  

Benchmark indexes traded down after the release of retail sales figures supported the case for one more rate hike in 2023 and higher rates through 2024. 

 

U.S. Indexes & Yields 

The S&P 500 index decreased 0.2% to 4,364.92 and the Nasdaq Composite fell 0.4% to 13,515.26. 

The yield on 2-year Treasury notes increased to 5.13%, 10-year Treasury notes inched higher to 4.76% and 30-year Treasury bonds edged up to 4.91%. 

Crude oil increased $0.33 to $87.02 a barrel and natural gas prices eased 1 cent to $3.09 a thermal unit. 

The dollar index edged higher to 106.48, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.  

 

U.S. Stock Movers 

Bank of America Corp increased 1.3% to $27.33 after the financial services company reported quarterly results. 

Revenue in the third quarter increased 3% to $25.2 billion from $24.5 billion and net interest income jumped 4% to $14.4 billion driven by higher interest rates and loan growth. 

Net income in the quarter increased to $7.8 billion from $7.4 billion and diluted earnings per share edged up to 90 cents from 88 cents a year ago.  

The provision for loan losses edged up by $336 million to $1.2 billion, reflecting weakening commercial real estate market conditions and stretched consumers.  

Goldman Sachs was unchanged at $314.50 after the financial services provider reported mixed quarterly results. 

Third quarter revenue edged slightly lower to $11.8 billion from $11.97 billion and net income dropped to $2.1 billion from $3.1 billion and diluted earnings per share fell to $5.47 from $8.25 a year ago.. 

The 6% decline in revenue in asset management was overshadowed by an 8% increase in global investment banking fees. 

Johnson & Johnson added 0.1% to $157.57 after the company reported slightly better-than-expected quarterly results. 

Revenue in the third quarter increased 6.8% to $21.3 billion from $19.99 billion and net earnings was flat at $4.3 billion and diluted earnings per share edged up 4% to $1.69 from $1.62 a year ago. 

Sales in the U.S. increased 11.1% to $12 billion from $10.8 billion and international sales rose 1.6% to $9.3 billion from $9.2 billion a year ago. 

The company revised higher its estimate of non-GAAP annual sales growth estimate to between 8.5% and 9.0% from the previous estimate between 8.0% and 8.5%.