US Close: US Stocks eke out a gain, Fed Minutes, Strong Retail Sales Rebound

US stocks erased earlier losses and eked out a gain after the Fed Minutes showed policymakers were not any closer to signaling aggressive policy tightening.  Risk aversion returned as geopolitical tensions remained the focal point as no confirmation happened with a de-escalation with Russia-Ukraine concerns. The Fed Minutes were less hawkish than many expected and that helped risk appetite return a little.  


The Fed’s Minutes showed interest rate hikes are coming and that they are readying for a significant reduction in the size of the balance sheet. Investors that were worried that the Fed would be pressured to begin the balance sheet runoff fairly soon could breathe a sigh of relief. The Fed sees inflation pressures broadening deep into the year but they would not be rushed into making any decisions into a faster tightening pace. 

US Data

Investors were pleasantly surprised with today’s retail sales report. After a couple months of disappointing reports, the January retail sales report strongly rebounded from the omicron wave in December and front-loaded holiday shopping.  The retail sales headline increase of 3.8% in January was much better than the 2.0% consensus estimate and downwardly revised prior reading of -2.5%.  The consumer appears to be strong despite the steady stream of pricing pressures and that could lead some at the Fed to justify a supersized rate hike at the March FOMC. 

US factories showed some progress in getting their hands on supplies, but the chip shortage still persists. Production at factories in January increased by 1.4%, better than the consensus estimate 0.5%.  Heating demand was notable and helped drive the index for utilities by 9.9%. 

Inflation is not easing just yet for manufacturers and that should support the argument that inflation might not be peaking for a couple more months. 

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya