why signs of US economic power weakened the stock market

Index Dow Jones Industry fell 0.7% to 43,444.99; He S&P500 index lost 1.3% to 5870.62 points, and Nasdaq The composite index depreciated by 2.2% to 18,680.12 points.

Treasuries are rising

Treasury yields rise as rates fade after US retail sales rose slightly more than expected in October, up 0.4% last month, above the 0.3% forecast and compared with an upwardly revised 0.8% rise in September. Strong consumer spending helped the economy maintain strong growth last quarter.

At the same time, US import prices rise unexpectedly in October, recovering 0.3% last month after an unrevised 0.4% fall in September, the latest evidence of a lack of progress in reducing inflation in recent months.

“Better-than-expected retail spending highlights the story reluctant consumerwhich perpetuates strong economic conditions,” investment bank Stifel said in a note Friday.

These data tempered expectations for further rate cuts. Federal Reserve President, Jerome Powellwarned on Thursday that the strength of the US economy will allow the Fed to take its time deciding how and when to cut interest rates.

For his part, the President of the Federal Reserve Bank of Chicago Austan Goolsby

said on Bloomberg TV Friday that he believes the U.S. central bank will likely shut down. cutting the official interest rate by another quarter of a percentage point this year and another percentage point next year. “That was the forecast from Fed officials in September, citing Federal Reserve forecasts released in the ninth month of the year.”

Actions in the maze

Among the main market drivers Applied materials fell 8.7%. after its quarterly earnings fell short of some investor expectations, and China’s earnings slowdown is key controversy amid challenging demand for wafer manufacturing equipment (a material used in the production of integrated circuits and in photovoltaic energy to produce solar cells).

“So unless the company acquires a large number of WFE (World Federation of Exchanges) shares in the next year, like LRCX (Lam Research Corporation is a US supplier of wafer fabrication equipment and related services for semiconductors), we will remain on the sidelines.” “He said UBS Investment Bank in the note.

Domino’s Pizza lost profit (-1.2%) and Pool Corporation rose (+0.2%) after Berkshire Hathaway (-1.2%), acquired shares in two companies.

Alibaba shares fell 2.7% after the Chinese e-commerce giant reported moderate revenue growth in its latest quarter.

Palantir said it was moving its listing to the Nasdaq Global Select Market from the New York Stock Exchange, sending its shares up nearly 12%.

Visa Inc (+0.4%) shares hit new 52-week highand continue to push ahead following Donald Trump’s presidential victory, fueled by expectations that his economic policies will spur consumer spending and favor payment processors such as Visa.

The president-elect’s proposal to expand and extend tax cuts is likely to increase household disposable income and spur business investment.

resulting in increased transaction volumes, Visa’s main source of revenue. Additionally, deregulatory policies could benefit Visa by lowering compliance costs in the financial sector, allowing the company to invest more in innovation. This could accelerate Visa’s development of digital payments technologies, expand its global network and facilitate partnerships with fintech startups.

Goldman Sachs Economic Forecast for 2025

Goldman Sachs expects outpacing US economic growth to continue in 2025driven by policies planned under the newly elected Donald Trump administration. In a commentary published Thursday, Goldman strategists provided a broadly favorable outlook for global markets, with their base case forecast calling for a “favorable risk environment and outperformance of the U.S. economy.”

“We expect modest positive returns in developed market equities, commodities and bonds, as well as a gradual appreciation of the dollar.,” wrote the strategists led by Jan Hatzius. “But markets have already come a long way in a risk-positive direction and it will be important to limit exposure to extreme values ​​around our baseline,” they added.

Goldman Sachs projects US economic growth of 2.5% by 2025outpacing other developed markets (DMs) for the third year in a row. The report gives a positive outlook on the Trump administration’s expected policies, which include “higher tariffs on China and autos, much lower levels of immigration, some new tax cuts and looser regulations.”

These measures are likely to boost business sentiment and investment, although the possibility of a “large common tariff” poses a significant downside risk. On inflation, Goldman Core personal consumption price index (PCE) inflation in the US is expected to slow to 2.4%.

by the end of 2025, slightly higher than previous forecasts. However, a blanket tariff of 10% could raise inflation to about 3%.

According to Goldman’s note, Expanding trade war will support the US dollar, but put pressure on global stocks. “Unusually high US equity valuations not only reduce expected long-term returns, but also heighten the potential reaction to any economic weakness,” the strategists continued.

Except, there may be a positive tailwind If policy becomes more business-friendly, oil prices will fall significantly due to excess capacity or concerns about inflation and financial problems.