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Friday, June 21, 2024

S&P 500 declines following an attack by Iran on Israel and Retail Sales

Key Takeaways:

  • The retail sales data for March exceeded expectations.
  • The Cboe Volatility Index increased by nearly 11%, reaching its highest level since October 31st.
  • Iran launched an attack on Israel in response to a suspected Israeli strike on the Iranian consulate in Damascus earlier this month.

S&P 500’s Decline and Economic Data

The S&P 500 saw a 1.2% decline following Iran’s attack on Israel and the release of the retail sales report, which raised concerns about potential inflationary pressures. The Cboe Volatility Index increased by nearly 11%, reaching its highest level since October 31st.

CBOE Volatility Index 1-Minute Price Data

The retail sales data for March exceeded expectations, with actual year-over-year growth at 4% compared to the consensus estimate of 2.5%. Retail sales excluding gas and autos also surpassed expectations, rising 1% month-over-month against the consensus of 0.3%. These stronger-than-anticipated figures could cause inflation to last longer within the economy. The Federal Reserve still says that there are concerns about keeping inflation low.

CPI Numbers

Last week, CPI Numbers showed that inflation was well above the consensus estimate. Governor Michelle Bowman also warned against cutting rates too slowly or too quickly, as this could cause a recession or allow inflation to persist. The Federal Reserve’s meeting minutes also showed that almost all Federal Reserve officials agreed to have a restrictive monetary policy.

Data from the CME Fedwatch tool shows rates being at their current level until September of 2024, just a little over 2 weeks ago rates were expected to be cut by July.

September Possible Rate Cut. Source: CME Fedwatch Tool, https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

Adding to the market’s downturn is the escalating tension between Iran and Israel. Iran launched an attack on Israel in response to a suspected Israeli strike on the Iranian consulate in Damascus earlier this month. The attack, which involved over 300 projectiles, including drones and ballistic missiles could possibly cause a bigger war in the Middle East.

While Israel’s aerial defense systems and allies intercepted most of the projectiles, the attack has raised fears of a potential regional conflict. The United States and other Western allies have insisted Israel exercise restraint and pursue a path of de-escalation to avoid an escalation in the Middle East.

Lazarus
Lazarushttps://ljlnews.com
Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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