Daily Market Update 1/17/24

On January 17, 2024, the stock market declined across all major indices:

 

-Dow Jones Industrial Average (DJIA): down 0.3% to 37,266.67

-S&P 500: down 0.6% to 4,739.21

-Nasdaq Composite: down 0.6% to 14,855.62

 

The decline triggered by rising bond yields after the stronger-than-expected retail sales data, which fueled concerns over sticky inflation and the possibility of the Federal Reserve delaying interest rate cuts. This negatively impacts growth-oriented and small cap stocks.

 

Why is that? The stronger-than-expected retail sales data indicates the economy is doing fine and consumers are resilient, which works against the Federal Reserve efforts to achieve its 2% inflation objective. This forces the Federal Reserve to take conservative approach and will not cut rates aggressively as the market expected. This explains the stronger decline in small cap stocks compared to the large cap stocks because small caps tend to underperform during high interest rate environment.

 

Furthermore, sector rotation contributed to a fast decline for small caps stocks. With the growing concerns of the market uncertainty, investors will pile in large cap stocks and some sectors like consumer staples as safer havens.

 

Overall, the January 17th market confirmed a continuation of the rough start for 2024 and the strong market volatility concerning about the uncertain economic outlook.

 

Stay tuned for more updates.

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