Economic Worries May Continue To Weigh On Wall Street

The major U.S. index futures are currently pointing to a lower open on Thursday, with stocks likely to see further downside after moving sharply lower over the course of the previous session.

Concerns about the economic outlook may continue to weigh on the markets following yesterday's disappointing retail sales and industrial production data.

Traders also remain concerned about the outlook for interest rates amid worries the Federal Reserve will continue aggressively raising rates despite signs of a slowdown in inflation.

Stocks saw initial strength during trading on Wednesday but moved sharply lower over the course of the session. The major averages all showed notable moves to the downside after ending Tuesday's trading mixed.

The major averages fell to new lows for the session going into the close of trading. The Dow plunged 613.89 points or 01.8 percent to 33,296.96, the Nasdaq slumped 138.10 points or 1.2 percent to 10,957.01 and the S&P 500 tumbled 62.11 points or 1.6 percent to 3,928.86.

The sell-off on Wall Street came as traders reacted to a slew of U.S. economic data, including a Commerce Department report showing a steep drop in U.S. retail sales in the month of December.

The Commerce Department said retail sales tumbled by 1.1 percent in December after slumping by a revised 1.0 percent in November.

Economists had expected retail sales to decrease by 0.8 percent compared to the 0.6 percent drop originally reported for the previous month.

Andrew Hunter, Senior US Economist at Capital Economics, said the steep drop in retail sales "adds to the evidence from the surveys that the economy was rapidly losing momentum towards the end of last year."

"Although GDP growth still looks to have held up over the fourth quarter as a whole, we continue to expect the economy to fall into recession in the first half of this year," Hunter added.

A separate report released by the Federal Reserve showing industrial production in the U.S. decreased by much more than expected in the month of December.

The Fed said industrial production slid by 0.7 percent in December after falling by a revised 0.6 percent in November. Economists had expected industrial production to edge down by 0.1 percent compared to the 0.2 percent dip originally reported for the previous month.

Meanwhile, the initial strength on Wall Street came after a report from the Labor Department showed U.S. producer prices fell by more than expected in the month of December.

The Labor Department said its producer price index for final demand declined by 0.5 percent in December after inching up by a revised 0.2 percent in November.

Economists had expected producer prices to edge down by 0.1 percent compared to the 0.3 percent increase originally reported for the previous month.

The report also showed the annual rate of producer price growth slowed to 6.2 percent in December from 7.3 percent in November. The year-over-year growth was expected to slow to 6.8 percent.

Oil service stocks moved sharply lower over the course of the session, dragging the Philadelphia Oil Service Index down by 3.2 percent. The index ended the previous session at its best closing level in over three years.

Substantial weakness was also visible among banking stocks, as reflected by the 2.6 percent nosedive by the KBW Bank Index.

Utilities stocks also showed a significant move to the downside on the day, resulting in a 2.6 percent slump by the Dow Jones Utility Average.

Natural gas, tobacco and telecom stocks also saw considerable weakness, moving lower along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are edging down $0.08 to $79.40 a barrel after falling $0.70 to $79.48 barrel on Wednesday. Meanwhile, after slipping $2.90 to $1,907 an ounce in the previous session, gold futures are inching up $5.50 to $1,912.50 an ounce.

On the currency front, the U.S. dollar is trading at 128.53 yen versus the 128.90 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0803 compared to yesterday's $1.0794.


Asian stocks ended mixed on Thursday amid lingering uncertainty about the outlook for the global economy. Disappointing U.S. data released overnight and hawkish Fed comments added to the downbeat sentiment.

China's Shanghai Composite Index rose 0.5 percent to 3,240.28 after IMF Deputy Director Gita Gopinath said China could see a strong economic recovery from the second quarter onwards. Hong Kong's Hang Seng Index dipped 0.1 percent to 21,650.98.

Japanese shares dropped from one-month highs, as the yen regained footing on speculation that the Bank of Japan will eventually review its ultra-loose monetary policy given that inflation is at 41-year highs.

The Nikkei 225 Index dove 1.4 percent to 26,405.23 after rallying 2.5 percent in the previous session. The broader Topix closed 1 percent lower at 1,915.62 ahead of nationwide inflation data due on Friday.

Automakers led losses, with Toyota Motor, Nissan and Mitsubishi Motors tumbling 2-5 percent.

Department store operator J. Front Retailing jumped 3 percent as data showed the number of inbound tourists to Japan increased in 2022 for the first time in three years.

Seoul stocks ended higher to snap a two-day losing streak as foreign investors extended their buying streak to the seventh consecutive session. The Kospi gained 0.5 percent to close at 2,380.34. LG Chem, Samsung Electronics and KT Corp. rose 1-3 percent.

Australian stocks recovered from an early slide to end notably higher as mining giants BHP and Rio Tinto both reported solid iron ore production figures for the December quarter.

The benchmark S&P/ASX 200 Index gained 0.6 percent to close at 7,435.30, while the broader All Ordinaries Index settled 0.5 percent higher at 7,648.40.

BHP rose 1.2 percent and Rio Tinto shares soared 3.3 percent. Energy stocks succumbed to selling pressure after oil prices fell by nearly $1 in Asian trading to extend losses from the previous session on data showing a surprise jump in U.S. crude stocks.


European stocks have moved notably lower on Thursday as weak U.S. economic data and hawkish comments from Federal Reserve officials dents demand for riskier assets.

While the U.K.'s FTSE 100 Index has slumped by 1.2 percent, the German DAX Index is down by 1.7 percent and the French CAC 40 Index is down by 1.9 percent.

Oil & gas firms BP Plc and Shell have moved to the downside as crude prices extend losses on the back of weak U.S. economic data and a surprise build in U.S. crude stocks.

Harbour Energy has also moved sharply lower as it launched a review of its U.K. operations and cut its 2023 spending plan.

Melrose Industries has also dropped. The company said the aerospace business of the former GKN traded in line with expectations in 2022.

German electrical company Encavis has also plunged as Barclays downgraded its rating on the stock to "underweight" from "equal weight".

Meanwhile, events-and academic publishing group Informa has advanced after saying that it expects to report higher revenue and adjusted operating profit for 2022.

U.S. Economic Reports

New residential construction in U.S. fell for the fourth straight month in December, according to a report released by the Commerce Department on Thursday, although the decrease was much smaller than expected.

The report said housing starts slumped by 1.4 percent to an annual rate of 1.382 million in December after tumbling by 1.8 percent to a revised rate of 1.401 million in November.

Economists had expected housing starts to plunge by 4.8 percent to an annual rate of 1.359 million from the 1.427 million originally reported for the previous month.

The Commerce Department said building permits also dove by 1.6 percent to an annual rate of 1.330 million in December after plummeting by 10.6 percent to a revised rate of 1.351 million in December.

Building permits, an indicator of future housing demand, were expected to jump by 2.1 percent to an annual rate of 1.370 million from the 1.342 million originally reported for the previous month.

A separate report released by the Labor Department on Thursday unexpectedly showed a decrease in first-time claims for U.S. unemployment benefits in the week ended January 14th.

The Labor Department said initial jobless claims fell to 190,000, a decrease of 15,000 from the previous week's unrevised level of 205,000. The dip surprised economists, who had expected jobless claims to rise to 214,000.

The report said the less volatile four-week moving average also edged down to 206,000, a decrease of 6,500 from the previous week's unrevised average of 212,500.

The Federal Reserve Bank of Philadelphia also released a report showing regional manufacturing activity has contracted at a slower rate in the month of January.

The Philly Fed said its diffusion index for current activity climbed to a negative 8.9 in January from a negative 13.7 in December, although a negative reading still indicates a contraction. Economists had expected the index to inch up to a negative 11.0.

Looking ahead, the Philly Fed said most future indicators were positive, but expectations for growth over the next six months were not widespread.

At 9 am ET, Boston Federal Reserve President Susan Collins is due to give opening remarks before a Housing, Place, and Flexible Work: The Future of the New England Economy conference.

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended January 13th at 11 am ET. Crude oil inventories are expected to decrease by 1.8 million barrels after surging by 19.0 million barrels in the previous week.

Also at 11 am ET, the Treasury Department is due to announce the details of this month's auctions of two-year, five-year and seven-year notes.

Federal Reserve Vice Chair Lael Brainard is scheduled to speak on the economic outlook before an event hosted by the University of Chicago Booth School of Business Speech at 1:15 pm ET.

At 6:35 pm ET, New York Federal Reserve President John Williams is due to participate in a conversation before hybrid event hosted by Fixed Income Analysts Society, Inc.

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