On Wednesday, U.S. stock indexes finished sharply lower, with both the Dow Jones Industrial Average and the S&P 500 index booking their worst day in over a month. The weak performance was driven by data showing that retail sales in the holiday shopping season have fallen, raising concerns that consumer spending and economic growth may be losing momentum.
- The Dow fell -613.89 or -1.81%
- The S&P 500 was off -62.11 or -1.56%
- The Nasdaq lost -138.10 or -1.24%
On Wednesday, the U.S. Bureau of Labor Statistics (BLS) reported that wholesale prices slid 0.5% in December, the biggest decline since April 2020, when the coronavirus pandemic began. This adds to evidence that inflation, though still high, has started to ease. The figure was slightly better than the 0.6% expected by economists polled by the Wall Street Journal.
In tandem with the wholesale price drop, the BLS also reported that December retail sales dropped 1.1%, contracting for the second month in a row. This was a slightly steeper decline than the 1% expected by economists and a sign that consumer spending might be weakening. Retail sales are a key part of the U.S. economy and are closely watched by economists.
Furthermore, industrial production fell 0.7% in December, the biggest monthly decline since September 2021. This was another sign of economic weakness and could potentially be a cause for concern among policymakers.
Overall, the economic data released on Wednesday show some signs of easing inflation, though it is still elevated. Additionally, the data also point to potential weakness in the U.S. economy, as retail sales, as well as industrial production, has recently contracted. As such, it will be important to monitor the data over the coming weeks to see if the current trends continue or if the economy is able to turn things around in 2021…….
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