U.S. stock benchmarks traded lower Wednesday morning, even though a report on retail sales for January showed that American consumers bought more goods and services as the omicron variant of the pandemic faded.
The report comes ahead of the minutes of last month’s Federal Reserve meeting and as investors keep watch on the geopolitical crisis surrounding Ukraine, after a NATO official said they had seen no signs of Russian troop withdrawal around that country.
On Tuesday, the Dow industrials surged 422.67 points, or 1.2%, to close at 34,988.84, while the S&P 500 index rose 1.6% to 4,471.07. The Nasdaq Composite climbed 2.5% to 14,139.07.
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Stocks were lower, a day after all three benchmarks logged the first win in four sessions, on hopes Russia can be persuaded not to invade Ukraine. Reports that some Russian troops had moved back to their bases, and reports that Moscow was ready to talk with NATO and the U.S. earlier some relief buying on Wall Street.
Guarded optimism appeared to fade, however, Wednesday, after NATO Secretary-General Jens Stoltenberg told reporters that “we have not seen any withdrawal” of those Russian forces. “What we see is that they have increased the number of troops and more troops are on their way,” he said.
President Joe Biden urged Moscow to “choose diplomacy” on Tuesday, warning that a Russian move into Ukraine was still possible and reports that those Russian units had returned home couldn’t be verified. Russia said Wednesday it was returning more troops and weapons to bases, but NATO declared it saw no sign of a drawdown as fears that Moscow could invade Ukraine soon persisted.
Meanwhile, sales for U.S. retailers jumped 3.8% in January. The increase in sales was the largest since last March, when Americans spent a good chunk of their stimulus money from the government. Economists polled by The Wall Street Journal had forecast after retail sales fell a revised 2.5% in December. Households bought more goods in early 2022 after paring back in the final month of last year.
“Omicron and inflation were not enough to deter US consumers from spending in January as retail sales sprung back to life with a 3.8% surge, the strongest gain since March 2021 when stimulus checks reached households’ bank accounts, wrote Lydia Boussour and Kathy Bostjancic, economists at Oxford Economics.
“The rebound was nearly twice stronger than consensus expectations and led by buoyant vehicle sales and online shopping as virus fear kept consumers away from restaurants,” the economists wrote.
Separately, import prices for January rose 2% and 1.4%, excluding fuel costs and a reading of industrial capacity in use rose 77.6% in January, compared with 76.6% in December.
A report on business inventories and the National Association of Home Builder’s latest index were due at 10 a.m.
Later in the afternoon, investors will get the minutes of the most recent Federal Reserve meeting.
“Today’s FOMC minutes of the Jan. 26 meeting will be scrutinized for any rhetoric indicating a lean for hiking or not hiking in larger increments than 25 basis points,” said strategists at Saxo Bank, in a note to clients. “The market has priced in just over 40 basis points of hiking through that March FOMC minutes.”
Earnings news will continue to roll in on Wednesday, with Nvidia Corp. NVDA,
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Elsewhere, oil prices CL00,
On a tense day for markets with geopolitics shaking up the action, we’ve got a fresh view from Goldman Sachs on where stocks could end up this year.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.
Mark DeCambre is MarketWatch’s markets editor. He is based in New York. Follow him on Twitter @mdecambre.