Stocks opened higher but traded little changed throughout the day, while the US dollar, gold, and silver all made notable moves on Wednesday.
First, the scoreboard:
- Dow: 18,071.87, +3.64, (0.02%)
- S&P 500: 2,099.90, +0.78, (0.04%)
- Nasdaq: 4,985.70, +9.51, (0.19%)
And now, the top stories on Wednesday:
- Retail sales were flat in April. At 0% month-over-month, sales missed expectations for a rise of 0.2%. Excluding auto and gas sales, the print rose 0.2%, versus estimates for a gain of 0.5%. One bond trader thought the numbers were so disappointing, we might heading for a recession. However, Deutsche Bank’s Joseph LaVorgna noted that the numbers could be revised higher; March’s print, for instance, was restated as a 1.1% gain against 0.9% at first blush.
- Economists were again focused on whether consumers are spending their extra cash from low gas prices rather than saving, and if the weather-related weakness has lifted. “The continuing weakness of retail sales in April brings into question our working assumption that the soft patch through the winter months was largely due to the unseasonably cold temperatures in the Northeast,” wrote Capital Economics’ Paul Ashworth in a note to clients on Wednesday.
- The US dollar fell to a four-month low. The dollar fell after the retail sales report, and continued to slide through the day to as low as 93.51. The euro rallied against the dollar, climbing to as high as $US1.1382.
- Gold rallied nearly 2%, crossing the $US1,200 mark to as high as $US1218.50 per ounce. Silver jumped more than 3% to as high as $US17.2 per ounce.
- HSBC’s chief economist Stephen King says the world economy faces a “titanic problem.” In a note to clients Wednesday, he wrote: “The world economy is like an ocean liner without lifeboats. If another recession hits, it could be a truly titanic struggle for policymakers.” He continued, “Whereas previous recoveries have enabled monetary and fiscal policymakers to replenish their ammunition, this recovery — both in the US and elsewhere — has been distinguished by a persistent munitions shortage. This is a major problem.”
- US crude oil inventories fell by 2.19 million barrels last week, the second huge drop in a row. The decline brought the total number of barrels to 484.8 million, maintaining inventories at an 80-year high. But the build we’ve seen over the past several months may be slowing down. In its short term outlook released Tuesday, the Energy Information Administration projected that US oil output will decline from June through September before picking up again.
- Shares of Post Holdings fell 7% after the company said the national bird flu outbreak is hitting some of its farms. “Chicken flocks at company owned and third party farms in Nebraska and Iowa, respectively, have tested positive for AI [Avian Influenza],” the company said in a regulatory filing. “Including these two new incidents, Post now estimates that approximately 20% of its egg supply has been affected.”
- German bund yields marched even higher after a debt auction. Reuters reported that it was the first time since January 2014 that bund yields rose in an auction. The 10-year bund yield touched 0.75%. Bund and US Treasury yields move in the opposite direction to their prices, and have spiked in the last two weeks.
- Import prices fell 0.3% last month, the 10th straight period of a decline. Economists had expected a gain of 0.3%, according to Reuters.