Stock Markets: Good data, bad news?

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Dow falls three days
The blue-chip Dow Jones Industrial Average fell for the third straight day Wednesday. Wall Street’s other two main indexes also dropped as better-than-expected retail sales data helped lift Treasury yields. European stocks also fell, with British stocks leading regional losses after U.K. inflation clocked a surprise 4% year-on-year rise in December.

Strong retail sales
U.S. retail sales came in higher than expected for the last month of 2023 in a sign that holiday shopping picked up. Retail sales for December increased 0.6% vs. the 0.4% rise expected in a Dow Jones estimate. The rise was driven by clothing, accessories and online shopping.

Dimon in Davos
JPMorgan Chase CEO Jamie Dimon was one of the more highly anticipated guests at the World Economic Forum in Davos, Switzerland. Dimon discussed a variety of topics ranging from financial to geopolitical risks. He was also seen praising former U.S. President Donald Trump’s stance on the U.S. economy, immigration and taxes.

Apple Watch sales banned in U.S. again
The U.S. Court of Appeals for the Federal Circuit reinstated a sales ban on Apple’s watches with blood oxygen sensors. The ban will take effect Thursday, affecting both the Apple Watch Series 9 and Ultra 2 models. The injunction stems from an intellectual property dispute with medical device maker Masimo.

[PRO] Cheap energy stocks
The pros say some pockets of the energy market are poised for a jump after taking a beating last year. The energy sector was the second biggest loser on the S&P 500 last year. The CNBC Pro Screener Tool says they could still do well as companies in the sector are cheap and are seen rising over 10% their average price targets.

Treasury yields, however, have risen this week boosted by comments from Federal Reserve Governor Christopher Waller on Tuesday. The yield on the benchmark 10-year Treasury note continued to trade higher Wednesday, crossing the 4% mark on the back of better-than-expected U.S. retail sales for December.

The data showed American consumers somewhat loosened their purse strings in the last month of 2023. But for Wall Street, that was hardly any reason to celebrate based on how aggressively markets have been pricing in interest rate cuts by the Federal Reserve.

Waller’s comments on Tuesday at Davos about the U.S. central bank taking its time to cut rates this year, came as a sharp contrast to markets expecting the Fed’s first rate cut of 2024 to come as early as March.

“The Fed was already hammering away on its ‘no rush to cut rates’ message, and today’s stronger-than-expected retail sales won’t give them any reason to change their tune,” said Chris Larkin, managing director of trading and investing for E-Trade from Morgan Stanley.

About 55% of traders tracked by the CME Group’s FedWatch tool expect a 25 basis point rate cut in March, falling from 63% a day earlier.