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MSCI index down for fourth-straight session

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Dollar slips but poised for weekly gain

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US retail sales slightly above expectations

(Updated at 4:03 p.m. ET/2103 GMT)

By Chuck Mikolajczak

NEW YORK, Nov 15 (Reuters) - A gauge of global stocks

was set for its biggest weekly drop in two months and the

10-year U.S. Treasury yield hit its highest level in 5-1/2

months on Friday as economic data and comments from Federal

Reserve officials suggested a slower pace of interest-rate cuts

ahead.

Fed Chair Jerome Powell said on Thursday the central bank

did not need to rush to lower interest rates due to ongoing

economic growth, a solid job market and inflation that remains

above its 2% target.

The U.S. Commerce Department reported on Friday that retail

sales rose 0.4% last month after an upwardly revised 0.8%

advance in September. The growth topped the 0.3% rise expected

by economists polled by Reuters, after a previously reported

0.4% gain in September.

"In the last 48 hours we've had some pretty big changes, not

just from the election but from economic data that was better

than expected and Powell speaking about not having to be as

aggressive on interest-rate cuts," said Adam Rich, deputy chief

investment officer for Vaughan Nelson in Houston.

"Market expectations for interest-rate cuts have come down

materially and also the market is re-adjusting after a pretty

bullish reaction to the U.S. election."

In addition, the Labor Department said on Friday that import

prices unexpectedly rose 0.3% last month after an unrevised 0.4%

decline in September amid higher prices for fuels and other

goods. Analysts had expected a decline of 0.1%.

Equities had rallied after the U.S. presidential election, as

investors gravitated toward assets expected to benefit from

President-elect Donald Trump's policies in his second term after

he pledged to impose higher tariffs on imports, reduce taxes and

loosen government regulations.

But the gains have fizzled in recent days as markets try to

calibrate the Fed's rate-cut trajectory and any legislative

policy changes.

On Wall Street, the Dow Jones Industrial Average fell

305.87 points, or 0.70%, to 43,444.99, the S&P 500 fell

78.55 points, or 1.32%, to 5,870.62 and the Nasdaq Composite

fell 427.53 points, or 2.24%, to 18,680.12. Each of the

three major indexes closed at record highs on Monday.

For the week, the S&P 500 fell 2.08%, the Nasdaq declined

3.15%, and the Dow lost 1.24%.

Other Fed officials made comments on Friday that also

clouded the picture on the timing and magnitude of more rate

cuts.

MSCI's gauge of stocks across the globe

slumped 8.53 points, or 1.00%, to 842.67. It was on track for

its fourth-straight decline and biggest weekly percentage

decline since early September, around 2.4%.

In Europe, the STOXX 600 index closed down 0.77%

but eked out a small weekly gain, its first in four weeks.

Bond yields and the dollar have surged not just on growth

prospects but also on concerns that Trump's policies may

rekindle inflation after a long battle against price pressures

following the pandemic. In addition, tariffs could lead to

increased government borrowing, further ballooning the fiscal

deficit and potentially causing the Fed to alter its course of

monetary-policy easing.

The dollar index, which tracks the U.S. currency

against peers including the euro and Japan's yen, was 0.12%

lower on the day to 106.75 with the euro off 0.02% at

$1.0528.

The greenback had risen for five straight sessions and was

poised for its biggest weekly percentage gain since early

October.

Against the Japanese yen, the dollar weakened 1.24%

to 154.31. Sterling was down 0.45% to $1.2608.

Expectations for a 25-basis-point cut at the Fed's December

meeting stood at 58.4% on Friday, down from 72.2% in the prior

session, and 85.5% a month ago, according to CME's FedWatch

Tool.

The yield on benchmark U.S. 10-year notes rose

1.9 basis points to 4.439% after earlier reaching 4.505%, its

highest level since May 31. The yield is up about 13 bps this

week and is set for its eighth weekly rise in the past nine.

U.S. crude settled down 2.45% to $67.02 a barrel and

Brent fell to settle at $71.04 per barrel, down 2.09% on

the day, as investors digested a slower Fed rate-cut path and

waning Chinese demand.