Weak Economic Signals Send Equities into Retreat Amid Sluggish Growth Concerns

Major US stock benchmarks are facing headwinds today as disappointing labor market and consumer spending data paint a picture of economic weakness. The S&P 500 has slipped 0.32%, touching its lowest level in 2.5 weeks, while the Nasdaq 100 dropped 0.14% to mark a 3-week low. The Dow Jones Industrials fell 0.293%. Futures markets mirror this downward pressure, with December E-mini S&P 500 contracts off 0.30% and December E-mini Nasdaq futures declining 0.12%.

Economic Data Weighs on Market Sentiment

The immediate catalyst for today’s selloff stems from a confluence of sluggish economic indicators. The November unemployment rate unexpectedly climbed to 4.6%—a 4-year high—signaling potential labor market softening. October payroll figures also disappointed, falling by 105,000 against expectations of a 25,000 decline. Meanwhile, wage growth continued to moderate, with November hourly earnings posting their smallest year-over-year advance in 4.5 years at +3.5%, well below the +3.6% consensus forecast.

Consumer activity also underperformed. October retail sales came in flat month-over-month, missing the expected 0.1% gain. The only bright spot came from retail sales excluding automobiles, which rose 0.4% versus the anticipated 0.2%. Manufacturing activity has similarly stalled, with the December S&P manufacturing PMI sliding 0.4 points to 51.8—a 5-month low—falling short of the 52.1 projection.

Fed Rate-Cut Bets Gain Ground

Despite the economic headwinds, markets are interpreting these sluggish readings as dovish signals for monetary policy. Bond investors are pricing in a 24% probability that the Federal Reserve will cut the fed funds target range by 25 basis points at its January 27-28 meeting. This expectation has provided some cushioning for equities, as lower economic growth typically prompts easier financial conditions.

Treasury markets have responded accordingly. March 10-year T-note futures advanced 3 ticks, with the 10-year yield retreating 8 basis points to 4.165%. The steepening yield curve—driven by the Fed’s recent $40 billion monthly T-bill purchase program announced at last Wednesday’s meeting—continues to support shorter-duration fixed income, though longer-term Treasuries face headwinds from persistent inflation concerns. The 10-year breakeven inflation rate has declined to a 1.5-week low of 2.240%.

Energy Sector Bears the Brunt

Energy stocks are leading today’s losses as crude oil prices continue their sharp descent. WTI crude has plummeted more than 3% to a 4.75-year low, triggering broad-based selling across the sector. APA Corp leads the S&P 500 losers with a 5%+ decline, while Diamondback Energy is the Nasdaq 100’s weakest performer, falling more than 4%. Halliburton, Occidental Petroleum, Marathon Petroleum, ConocoPhillips, Baker Hughes, Phillips 66, and Devon Energy are all down more than 3%. Exxon Mobil and Valero Energy have also retreated more than 2%.

Bitcoin Strength Lifts Crypto-Correlated Equities

In contrast, cryptocurrency-linked equities are benefiting from Bitcoin’s resilience. Bitcoin has climbed more than 1% to $88.93K (up 1.43% over the past 24 hours), lifting digital asset plays higher. MicroStrategy leads Nasdaq 100 gainers with a 4%+ surge, while Galaxy Digital Holdings, MARA Holdings, and Coinbase Global have each advanced more than 1%.

Mixed Signals in Individual Stock Action

Booz Allen Hamilton Holding Corp dropped more than 7% after announcing CFO Calderone’s resignation effective February 1. Pfizer Inc retreated more than 4% following 2026 revenue guidance of $59.5 billion to $62.5 billion—below the $61.63 billion consensus midpoint. Humana fell more than 2% on full-year adjusted EPS guidance of $17.00, trailing the $17.06 consensus. Illinois Tool Works and Archer-Daniels-Midland each declined more than 2% following downgrade calls from Goldman Sachs and Morgan Stanley, respectively.

On the upside, Cognex surged more than 5% after Goldman Sachs delivered a double upgrade to buy with a $50 price target. Comcast led S&P 500 gainers with a 3%+ move higher following CNBC commentary on activist trading signals in swaps markets. Okta, Southwest Airlines, and Estee Lauder each advanced more than 2% on analyst upgrades. Ford Motor gained more than 1% after announcing it would cancel a planned electric F-series truck in favor of gas and hybrid production.

Global Markets Under Pressure

International equity markets are also experiencing losses. The Euro Stoxx 50 is down 0.68%, while Shanghai Composite declined to a 2-month low, closing 1.11% lower. Japan’s Nikkei Stock 225 slid to a 2-week low, ending 1.56% down. European government bond yields are mixed, with the 10-year German bund yield down 2 basis points to 2.851%, while the UK 10-year gilt yield climbed to a 3-week high of 4.561%.

Week Ahead: CPI and Sentiment Data in Focus

This week’s economic calendar will test whether sluggish growth concerns persist. Thursday’s initial jobless claims are expected to fall 11,000 to 225,000. More critically, November CPI is forecast at +3.1% year-over-year, with core CPI anticipated at +3.0%. Friday will bring November existing home sales (expected up 1.2% month-over-month to 4.15 million) and the University of Michigan consumer sentiment index revision (expected upward to 53.5 from the previously reported 53.3). These data points will likely determine whether market participants maintain their dovish Fed expectations or adjust course.