Your Evening Briefing: Economy Slows But Employment Stays Strong

The US economy showed signs of slowing, with retail sales and manufacturing dropping last month. But the labor market—despite thousands of firings by tech firms, banks and others in recent weeks—remained resilient as employers largely held onto workers. Initial applications for unemployment benefits fell last week to the lowest in two months. However, a separate measure of unemployed workers who’ve been out of a job for longer has climbed to the highest since February. At the same time, retail sales fell in November by the most in nearly a year, a broad-based decline reflecting the strain of inflation and a shift toward spending on services. Several factory gauges also showed contraction in data released on Thursday, burdened by higher borrowing costs and weaker demand.

Stocks dropped and the dollar rallied Thursday. The S&P 500 fell more than 2%, closing at its lowest level in more than a month. The tech-heavy Nasdaq 100’s losses exceeded 3%, with yield-sensitive stocks taking a hit. Equities in Europe also closed lower after the European Central Bank’s upward revision to 2024 inflation projections. Nomura Securities International cross-asset strategist Charlie McElligott says commodity trading advisers, who place macro bets in the futures market, likely turned sellers as the S&P 500 plummeted.