Your Evening Briefing: Markets Slide After Fed Tamps Down Rate-Cut Talk

Investors want an interest-rate cut. The Federal Reserve isn’t so sure the economy needs one yet. And now traders are throwing a tantrum. US December retail sales beat expectations across the board on Wednesday, showing that the consumer remains resilient, and knocked down the probability of a March rate cut to that of a coin toss. Fed officials have said as much, too. Fed governor Christopher Waller said rates would be lowered “methodically and carefully” at best. So all those bold bets for a March cut are being reconsidered, leading to higher Treasury yields and a lower stock market. Here’s your markets wrap. —Margaret Sutherlin

China’s economy grew 5.2% last year, hitting the official growth target for 2023. But the data released by Beijing also underscored that China’s economy hasn’t shaken off the problems that are most persistently weighing on domestic demand and confidence. A slew of indicators for home prices and property-related spending disappointed as the real estate crisis continues to bite. Deflationary pressures aren’t going away, with recent data showing prices dropped in December for a third consecutive month. China’s population also extended a historic decline, which could be an additional headwind down the road. Now attention turns to the government’s response—and Beijing up to this point has kept stimulus conservative for the world’s second biggest economy.