NEW YORK: Wall Street’s main stock indexes rose on Wednesday after Nike reported upbeat results, while investors drew comfort from data that showed improving consumer sentiment and a fall in inflation expectations.
US consumer confidence rebounded in December as inflation retreated and the labor market remained strong, while 12-month inflation expectations fell to 6.7%, the lowest since September last year.
Nike Inc jumped 13.7% after reporting its best quarterly revenue growth in more than a decade, barring one quarter, and beat profit expectations on strong holiday demand from North American shoppers.
Consumer discretionary stocks led gains among the major S&P 500 sectoral indexes, while financial shares also gained.
Nike peers Lululemon Athletica Inc, Under Armour Inc and Vans sneaker maker VF Corp rose between 1.3% and 2.8%.
FedEx Corp, which sparked a market selloff in September after pulling financial forecasts, rose 4%, on the delivery company’s plans to slash an additional $1 billion in costs.
“Most people think we are heading toward a recession, but when earnings like Nike and FedEx are strong, then all of a sudden that could pave the way for higher (stock) prices next year,” said Adam Sarhan, chief executive at 50 Park Investments, New York.
“The underlying conditions remain very weak and it appears that this could be just a little seasonal bounce until the end of the year.” On the other hand, US existing home sales slumped 7.7% to a 2-1/2-year low in November as the housing market remains plagued by higher mortgage rates.
Wall Street’s main indexes closed slightly higher on Tuesday, following early losses as Treasury yields jumped after the Bank of Japan’s surprise monetary policy tweak.
Fears of a recession following the US central bank’s prolonged interest rate hikes have weighed heavily on equities since its policy meeting last week, despite signs of cooling inflation.
However, the benchmark S&P 500 and Dow Jones Industrial Average were on track for their first quarterly gains this year, rising 7.2% and 15.4%, respectively, on the back of upbeat earnings, easing price pressures and hopes that the Federal Reserve will slow its rate hikes.
Other data expected through the week on core inflation and the labor market will likely determine the future course of interest rate hikes by the Fed.
At 10:08 a.m. ET, the Dow Jones Industrial Average was up 371.79 points, or 1.13%, at 33,221.53, the S&P 500 was up 39.44 points, or 1.03%, at 3,861.06, and the Nasdaq Composite was up 103.79 points, or 0.98%, at 10,650.91.
Energy stocks also rose tracking higher oil prices after data suggested a larger-than-expected draw in US crude stockpiles.
Tesla Inc was last up 1.2%, following a report that the electric-vehicle maker plans to cut jobs and freeze hiring, a day after Elon Musk said he will step down as Twitter CEO once he finds a replacement.
Market volumes are expected to decline this week before the Christmas and New Year holidays amid low participation.
Advancing issues outnumbered decliners for a 4.92-to-1 ratio on the NYSE and a 2.88-to-1 ratio on the Nasdaq.
The S&P index recorded four new 52-week highs and three new lows, while the Nasdaq recorded 23 new highs and 119 new lows.
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