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U.S. Stock Market Rallies on Resilient Retail Data
2024-08-16 05:50:08
Markets
Stocks
Retail

U.S. Stock Market Rallies on Resilient Retail Data

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The U.S. stock market experienced a sharp rally as recession concerns eased. The Nasdaq Composite Index rose over 2%, led by major retailers like Walmart, Target, and Costco.

Positive retail sales data reflected resilient consumer spending, which contributed to the improved investor sentiment. Cisco Systems provided an optimistic sales outlook and announced job cuts, while Nike and Ulta Beauty received new investments from notable investors.

The S&P 500 Index also advanced, with the consumer discretionary and information technology sectors leading the way. In addition, initial jobless claims declined, drawing attention ahead of Federal Reserve Chair Powell's speech.

The overall improvement in investor sentiment and underlying fundamentals supports a risk-on bias, according to Terry Sandven, Chief Equity Strategist at U.S. Bank Wealth Management.

Related news on that topic:

Stocks Rise as Economic Data Boost Confidence

The stock market saw gains as economic data brightened the outlook for growth. The Nasdaq rose 2.3%, the S&P increased by 1.6%, and the Dow was up 1.3%. Strong retail sales and falling jobless claims contributed to the positive sentiment. Walmart hit a record high after reporting upbeat earnings and raising its outlook. Other gainers included Cisco Systems and Ulta Beauty. However, the Empire State Manufacturing and Philly Fed data showed mixed results. Treasury yields rose, and there was a slump in July industrial and manufacturing production. The VIX, a measure of market volatility, touched a three-week low and saw its largest seven-day drop. The odds of a 25bp Fed rate cut climbed to 74.5%. The rally in the stock market was fueled by the belief that the US economy is not headed for a recession.

Latest economic data cools recession worries

Recent economic data has provided relief to concerns about a US economic slowdown. Retail sales rose 1% in July, surpassing expectations, while unemployment claims fell more than anticipated. This positive news led to a surge in stocks, with the S&P 500 experiencing its best weekly return in nine months. Experts attribute the rebound in retail sales to strong spending and broad-based growth. Market sentiment has shifted, with expectations of a 25 basis point interest rate cut by the Federal Reserve. However, economists suggest that gradual rate cuts would be sufficient, as there is no urgent need for significant economic stimulus. In the UK, despite anti-immigration riots and struggling public services, the economy grew 0.6% in Q2. Inflation rose slightly to 2.2%, and the Bank of England is expected to cut rates. However, growth is projected to slow down in the coming months.

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