Stocks and Indices Retracts on Inflation Concerns
Wall Street is subdued following economic data revealing a sharp rise in retail sales on Feb 17. Inflation risks and traders cautious from making big bets before the FED minutes were released in the late N.Y. session saw indices and stocks recoil. Still, worries about inflation may be far fetched since inflation readings were underwhelming, crashing the greenback and lifting the stock market.
Fears of coronavirus temporarily takes a back seat as traders focus on inflation, the labor market, and the stimulus package. There are tell-tale signs that inflation might rise after retail sales reading surpassed expectations, rising to 5.3 versus 1.1 percent, an improvement from -1 percent over the last month. While the FED might keep interest rates unchanged in 2021, a "hot" market might see that wait time reduced, impacting the stock market accustomed to cheap money.
Impact on indices:
Neutral. The stock market is vibrant and even overvalued, according to analysts. Rising inflation may see stocks retrace from their peaks, forcing a correction in major indices since the FED could raise rates to keep inflation in check.
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