Stocks slide on firm dollar, retail sales data

Global stocks slid from two-month highs and dollar maintained its safe-haven standing and managed to steady on Wednesday after stronger-than-expected US retail sales clouded the Fed’s inflation outlook and hopes that the Fed could ease its hawkish interest rate hikes.

Stocks in Europe pared overnight losses in Asia after Poland’s president said a missile that hit the country was probably a stray Ukrainian defense rocket, dispelling fears that it came from Russia.

US equities were hurt by a dire holiday sales outlook from Target Corp (TGT.N) as investors seized the opportunity after the recent softer inflation data to book profits given the susceptibility of the economic background in Europe and China.

But better-than-expected U.S. retail sales last month could help underpin the American economy in coming months and force the Fed to retain its aggressive rate posture despite cooler than expected inflation data this week and last.

Softer inflation data played as a hinderance factor for the dollar’s upside move. The dollar is steadier because markets are having this lasting geopolitical restiveness as well as signs of a fairly sturdy US economic backbone in the form of US retail sales.

Retail sales rose 1.3% in October, more than the 1.0% increase that economists polled by Reuters had forecast.

The dollar briefly pared losses on release of the retail sales data, but later fell against the euro to trade little changed against major currencies. The euro rose 0.37% to $1.038.