Stocks Slip As Strong November Retail Sales Raise Concerns Over 2025 Fed Rate Cuts

Wall Street began Tuesday’s session on a weaker note, with major indices slipping after November's robust retail sales report reignited investor concerns that the Federal Reserve might hold back interest rate cuts next year.

The data, which underscored resilient consumer spending heading into the holiday season, added a fresh layer of uncertainty to the Fed's future rate path ahead of Wednesday’s highly awaited December Federal Open Market Committee meeting.

Retail sales surged 0.7% last month, outperforming consensus estimates of a 0.5% increase and marking a notable acceleration from October's upwardly revised 0.5% gain.

On an annual basis, sales climbed 3.8%, hitting their fastest pace since December 2023. A significant portion of the strength came from auto sales, which soared 2.6% on a monthly basis and by a robust 6.5% year-over-year, highlighting consumers' willingness to make big-ticket purchases in the fourth quarter of the year.

Spending was also robust in other categories. Nonstore retailers, driven by e-commerce activity, posted a 1.8% monthly gain, reflecting the growing dominance of online shopping as the holiday season commenced. Sporting goods, hobby, and book stores registered a 0.9% uptick, showing steady demand for discretionary items.

Market Reaction: Pressure Builds On Equities

The stronger-than-expected data put equity markets under pressure, as investors recalibrated their expectations for the Fed's next moves.

The S&P 500 index – as tracked by the SPDR S&P 500 ETF Trust SPY – and Dow Jones Industrial Average both fell 0.7%, while the Nasdaq 100 – tracked by the Invesco QQQ Trust, Series 1 QQQ – slid 0.8%, weighed down by weakness in the chip sector.

Semiconductor stocks led the downturn amid renewed geopolitical tensions after reports surfaced that China is broadening antitrust scrutiny on U.S. chipmakers’ acquisitions in recent years. Last week, Beijing opened an investigation on U.S. chip giant Nvidia Corp.‘s NVDA 2019 acquisition of Mellanox Technologies.

Investors Face Fed Uncertainty

The robust retail sales data is the latest in a series of reports—alongside hotter-than-expected inflation prints and upbeat December Purchasing Managers’ Index surveys—that challenge the case for aggressive rate cuts next year.

While a 25-basis-point reduction at the Fed's policy meeting this week is widely anticipated, the central bank's outlook for 2025 remains in question.

Fed fund futures now suggest an 80% chance the Fed will hold rates steady at its January meeting, while expectations for a March rate cut have softened, with odds slipping to 58% from 60% a day earlier.

Betting-implied odds from CFTC-regulated Kalshi continue to suggest an elevated 92% probability of four cuts next year, yet financial markets now imply only three rate cuts.

Top 5 S&P 500 Performers

Company	Price ($)	% Change
SolarEdge Technologies Inc. SEDG	14.35	+16.57%
Pfizer Inc. PFE	26.24	+3.88%
ON Semiconductor Corp. ON	68.65	+3.26%
Tesla Inc. TSLA	475.11	+2.82%
Moderna Inc. MRNA	42.81	+2.37%

Top 5 S&P 500 Losers

Company	Price ($)	% Change
Broadcom Inc. AVGO	234.36	-6.29%
APA Corporation APA	21.00	-4.35%
Constellation Energy Corp. CEG	231.09	-3.43%
Humana Inc. HUM	252.18	-3.33%
NRG Energy Inc. NRG	91.18	-3.25%

Top 5 Nasdaq 100 Performers

Company	Price ($)	% Change
Super Micro Computer Inc. (NASDAQ: SMCI9	34.47	+3.08%
Tesla Inc.	472.84	+2.33%
Regeneron Pharmaceuticals Inc. (NASDAQ: REGN)	740.51	+2.24%
ASML Holding N.V. ASML	738.86	+2.22%
NXP Semiconductors N.V. NXP	222.95	+2.21%

Top 5 Nasdaq 100 Losers

Company	Price ($)	% Change
Marvell Technology Inc. MRVL	114.10	-8.52%
Broadcom	234.15	-6.37%
Nvidia	127.15	-3.65%
Constellation Energy	231.04	-3.45%
SiriusXM Holdings Inc. SIRI	22.02	-2.76%

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