- Weak retail sales data on Tuesday sent bond yields lowers
- Month-to-month sales rose 0.1%, below estimates.
US stocks edged up on Tuesday after retail sales data for May came in weaker than expected, sending Treasury yields lower.
The S&P 500 and Nasdaq continued their record-setting run, with investors eyeing the impact of a less robust consumer on the outlook for rate cuts.
US consumers appeared to cut back last month, with month-over-month sales rising 0.1% in May, below estimates. Prior months were also revised lower. Sales climbed 2.3% year-to-year.
Investors this year have grown sensitive to signs of economic weakness, and markets will want to see how this could play into the Federal Reserve's monetary policy plans.
Treasury yields responded by dropping about three basis points to 4.25%.
"The much anticipated retail sales report pushed Treasury yields lower as it came in weaker than estimates, but it was the downward revision for two previous months that has analysts concerned that lower and middle income wage earners are under pressure from both prices and higher prices," Quincy Krosby, chief global strategist for LPL Financial, said Tuesday morning.
"Should employment data, particularly initial unemployment claims, continue to indicate a more defined softening in the labor market, the Fed may—as Fed Chair Powell suggests —need to recalibrate its timetable for commencing policy easing."
So far, most investors continue to bet on the first rate cut to happen in September, according to the CME FedWatch Tool, though recent comments from the Fed put the date of the first cut at the December policy meeting.
Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Tuesday:
- S&P 500: 5,483.03, up 0.18%
- Dow Jones Industrial Average: 38,848.97, up 0.18% (-70.87 points)
- Nasdaq composite: 17,874.40, up 0.08%
Here's what else happened today:
- Three weak spots in labor that could trigger steeper Fed cuts, according to Goldman Sachs.
- Microsoft could climb 24% to $550 thanks to AI monetization, Wedbush Securities says.
- Treasury secretaries Janet Yellen and Larry Summers have blasted Trump's plan to replace the income tax with tariffs.
- Here's what needs to happen for stocks to avoid a 23% correction, according to JPMorgan's Kolanovic.
In commodities, bonds, and crypto:
- Oil futures rose. West Texas Intermediate crude oil was up 0.25% to $80.50 a barrel. Brent crude, the international benchmark, edged 0.2% higher to $84.46 a barrel.
- Gold inched up to $2,336 per ounce.
- The 10-year Treasury yield slid three basis points to 4.25%.
- Bitcoin fell by 1% to $64,648.