S&P 500 Drops 0.7% on January 17, 2025: Retail Sales Surge Clouds Outlook on Interest Rate Cuts
On January 17, 2025, the S&P 500 declined by 0.7% as stronger-than-expected December retail sales data raised concerns over the likelihood of upcoming Federal Reserve interest rate reductions.
Michael Bromberg is a seasoned finance editor with over ten years of experience, specializing in simplifying complex financial concepts for broad audiences. He holds a Bachelor of Arts in Literature from the University of Wisconsin-Madison and a Master’s degree in Linguistics from Universidad de Antioquia in Medellin, Colombia.
Highlights from January 17, 2024 Market Activity
- The S&P 500 fell by 0.7% amid robust December retail sales that challenged expectations of imminent interest rate cuts.
- Albemarle's stock plunged following announcements of workforce reductions and cost-saving initiatives due to declining electric vehicle demand.
- Rate-sensitive sectors, especially real estate, experienced pressure amid fears that the Federal Reserve may delay its rate-cutting cycle.
U.S. stock indices retreated as the Census Bureau reported a 0.6% month-over-month increase in December retail sales, surpassing forecasts. This consumer spending strength casts doubt on the Federal Reserve's ability to implement interest rate cuts this spring.
The S&P 500 closed down 0.7%, with the Nasdaq and Dow Jones Industrial Average falling 0.6% and 0.3%, respectively. These losses marked the second consecutive day of declines in a shortened trading week.
Albemarle Corporation (ALB) shares dropped 4.2%, the steepest fall on the S&P 500, after the lithium producer revealed plans for layoffs and other cost reductions amid waning demand for electric vehicles and falling lithium prices impacting profitability.
Concerns about a postponed Federal Reserve rate-cutting cycle weighed heavily on rate-sensitive sectors like real estate. Boston Properties (BXP), a leading real estate investment trust focused on premium office spaces, saw its shares decline 3.7%.
Wynn Resorts (WYNN) shares fell 3.6% following UBS analysts’ downgrade of the stock price target to $108. This drop coincided with news that key executives, including the CEO and CFO, sold shares recently.
Johnson Controls International (JCI) was the top gainer on the S&P 500, rising 3.5%, partly recovering from the previous day’s losses after announcing a new Chief Financial Officer appointment.
PayPal (PYPL) shares rebounded 2.5% despite a downgrade from Mizuho and concerns about competition for younger consumers. The turnaround occurred after PayPal’s CEO emphasized the importance of innovation and leveraging artificial intelligence to enhance profitability during a CNBC interview.
Heightened uncertainty over rate cuts bolstered traditionally defensive stocks, including food producers. J.M. Smucker (SJM) shares increased by 2.0%, and Campbell Soup Company (CPB) rose 1.3%.
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