Wall Street’s main indexes have risen as retail sales data for July indicated resilient consumer spending, allaying fears of an imminent recession in the world’s biggest economy.
All megacap and growth stocks edged up, with Tesla leading the pack and rising 4.1 per cent.
Nine of the 11 major S&P 500 sectors were trading higher, with consumer discretionary and materials leading gains.
Retail sales increased 1.0 per cent last month after a downwardly revised 0.2 per cent drop in June, easing fears of a sharp economic slowdown that were fanned by a jump in the unemployment rate last week.
“The economy is not going into a recession imminently. This will take 50 basis points in September off the table. Still think that 25 basis points make sense just because inflation continues to ease,” said Steve Wyett, chief investment strategist at BOK Financial.
The yield of the two-year and 10-year Treasury notes rose after the data, with traders increasing the bets for a 25 basis points rate cut by the Federal Reserve to 75 per cent versus 65 per cent before the data.
Meanwhile, retail bellwether Walmart added 7.5 per cent after raising its annual profit forecast for the second time this year, as buyers in the US kept flocking to its stores for inexpensive essentials.
Rival Target also jumped 4.8 per cent, while Costco advanced 2.0 per cent.
A separate reading also showed the number of people in the US filing new applications for unemployment benefits unexpectedly fell last week.
Investors have kept a cautious eye on this week’s data releases – the last set of economic indicators before Fed chairman Jerome Powell delivers a much-anticipated speech at Jackson Hole next week.
Atlanta Fed president Raphael Bostic told the Financial Times that he is open to an interest rate cut in September while St Louis Fed chief Alberto Musalem stated that the time for the US central bank to start easing monetary policy may be nearing.
The S&P 500 on Wednesday extended its winning streak to five sessions, boosted by softer inflation data, but the Nasdaq barely scraped into positive territory as Alphabet and some megacap stocks weighed.
In early trading on Thursday, the Dow Jones Industrial Average rose 503.66 points, or 1.26 per cent, to 40,512.05, the S&P 500 gained 56.25 points, or 1.03 per cent, to 5,511.46 and the Nasdaq Composite gained 206.07 points, or 1.20 per cent, to 17,398.67.
Among other movers, Cisco Systems rose 9.4 per cent after it forecast better-than-expected first-quarter revenue and said it was cutting 7.0 per cent of its global workforce.
Nike climbed 3.3 per cent as billionaire investor William Ackman built new stakes in the sportswear company while Ulta Beauty jumped 10.4 per cent after Warren Buffett’s Berkshire Hathaway acquired a stake in the cosmetics store chain.
Deere & Co gained 5.8 per cent after the farm, construction and forestry equipment maker beat analysts’ expectations for third-quarter profit.
Advancing issues outnumbered decliners by a 4.76-to-1 ratio on the NYSE and by a 4.18-to-1 ratio on the Nasdaq.
The S&P 500 posted 21 new 52-week highs and one new low while the Nasdaq Composite recorded 38 new highs and 30 new lows.