Mid-Week Market Minute 8.16.23

Stocks Trend Lower; Core Retail Sales Report

Stocks trended lower in early trading this week with the S&P 500 lower by about 0.60%. Overseas, international stocks were lower by about 1% as renewed concerns over China’s economic recovery loomed. Specifically, industrial production and retails sales grew less than expected on a year-over-year basis, leading to a surprise rate cut by the People’s Bank of China. This comes as Asian markets have been under pressure recently over concerns about increasing defaults in the banking and property sectors in China.

In the U.S., the consumer continues to show resiliency as retail sales on Tuesday came in well above consensus. Core retail sales increased 1% in July and were revised higher in both August and July. While Amazon Prime Day likely pulled forward some spending from August into July, we also saw spending on food services and drinking places jump to a record high (GSAM). Looking forward to Wednesday afternoon, investors will keep a close eye on the Federal Reserve meeting minutes from July for insights into the future path of interest rates. According to Fedwatch data, markets are pricing in about a 90% chance of no change in the funds rate at the next meeting on Sept. 20, which would leave the benchmark rate at a range of 5.25%- 5.50%. On the growth front, the latest data from the Atlanta Fed’s GDPNow estimates annualized GDP growth of 5.0% for the third quarter, reflecting  personal consumption expenditures growth as well as private domestic investment growth as consumer spending continues to be robust.

Source: GSAM, CNBC, JPMorgan

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