US Markets Mixed After Retail Sales Drop – Dow Down 0.6%
US stocks had a mixed day on Friday after retail sales figures recorded their biggest decline since March 2023, as consumer concerns over tariffs and higher prices weighed heavily on Main Street. The Dow took a hit, dropping 0.57% on the day, while the S&P 500 closed almost flat, down just 0.01%. The Nasdaq, however, gained 0.41%, securing its largest weekly increase since early December.
The dollar continued its recent decline following the data, with the DXY falling 0.52% to close at 106.71. US Treasury yields also dropped, with the 2-year yield down 3.7 basis points to 4.270% and the 10-year yield down 5.3 basis points to 4.476%.
Oil prices declined further on optimism surrounding a potential peace deal in Ukraine, with Brent crude down 0.37% to $74.74 and WTI falling 0.77% to $70.74 per barrel. Meanwhile, gold saw significant movement, but this time it pulled back from recent record highs as profit-taking flows hit the market, closing the day down 1.56% at $2,881.60.
Dollar Under Pressure as Fed Rate Cut Expectations Increase
A combination of weaker economic data, tariff reprieves, and increasing expectations of a Federal Reserve rate cut has led to a sharp decline in the dollar over the past week. The greenback is now more than 3% below its annual high, hitting its lowest level of 2025 in trading on Friday.
On the data front, Friday’s retail sales figures recorded their weakest print since March 2023, alongside weaker PPI components that contribute to the Federal Reserve’s preferred PCE inflation metric. These factors have put pressure on the dollar and led markets to shift expectations for a potential Fed rate cut forward—from September to June, with nearly a 50/50 chance of a 25-basis-point cut now priced in.
Geopolitics have also played a role, with President Trump and the new US administration easing the urgency around tariff implementation. Traders are now waiting to see whether tariffs will indeed be enforced in the coming months—an outcome likely to drive dollar appreciation—or if further delays will trigger additional downside for the currency.
Slow Start to a Big Trading Week
The trading week is set to begin slowly today, with little on the macroeconomic calendar to provide fresh market direction. Public holidays in both the US and Canada later in the day could further dampen volatility.
US markets ended Friday on a mixed note, and Asian markets are expected to open on the back foot today. Traders will closely monitor newswires for any geopolitical updates, particularly concerning US tariffs, which could further impact market sentiment.
Range-bound trading conditions are expected throughout the day, although some products are currently at sensitive price levels. With liquidity likely to thin later in the session, any unexpected developments could lead to sharp and rapid market movements.
