The S&P 500 and the Dow rose on Tuesday following softer-than-expected U.S. retail sales numbers, with focus on commentary from a slew of Federal Reserve officials later in the day.
Data showed U.S. retail sales rose 0.1% in May, versus the 0.3% increase expected by economists polled by Reuters, as lower gasoline prices weighed on receipts at service stations.
Markets slightly increased bets on two interest rate cuts from the Fed this year following the data, according to LSEG’s FedWatch.
“The weaker-than-expected data’s telling me that consumers are still having a difficult time and that the economy is still moving forward, but at a slower pace,” Robert Pavlik, senior portfolio manager at Dakota Wealth Management, said.
Wall Street retreats with data, Fed comments in focus
“The Fed has to start thinking about cutting interest rates, perhaps sooner than the end of the year.”
A separate report showed May industrial production and manufacturing output both rose 0.9%, beating expectations.
Chip stocks continued their recent rally, boosting the Philadelphia SE Semiconductor index to a record high.
Qualcomm, U.S.-listed shares of Taiwan Semiconductor Manufacturing Co, Arm Holdings and Micron were up between 1.3% and 5%.
The Nasdaq was flat, with losses in Alphabet, Amazon and Meta Platforms offset by gains in chip stocks.
Tech shares lifted the benchmark S&P 500 to its fifth record high close in six sessions on Monday, and the Nasdaq to its sixth consecutive record close.
Trading volumes are expected to be light, with markets shut on Wednesday for the Juneteenth holiday.
Energy was the top S&P 500 sector gainer, up 1.5%, while utilities were the worst hit.
Focus will be on comments from Fed officials for clues on how the central bank’s members view the current economic situation and path ahead for monetary policy, after recent projections showed the Fed now sees just one interest rate cut this year instead of the three previously forecast.
New York Fed President John Williams said rates will come down gradually over time, but declined to comment on the timing of it.
Six other Fed speakers are scheduled for Tuesday, including voting committee member Adriana Kugler.
Hopes for multiple rate cuts this year, enthusiasm for AI-linked companies and strong earnings from other tech firms have supported equities.
Citigroup raised the year-end target for the S&P 500 to 5,600 points from 5,100.
At 9:46 a.m. ET, the Dow Jones Industrial Average was up 88.24 points, or 0.23%, at 38,866.34, the S&P 500 was up 9.62 points, or 0.18%, at 5,482.85, and the Nasdaq Composite was down 4.66 points, or 0.03%, at 17,852.36.
Homebuilder Lennar fell 2.2% after forecasting lower-than-expected third-quarter home deliveries.
Edtech company Chegg jumped 21.6% after announcing job cuts as part of a restructuring plan.
Advancing issues outnumbered decliners for a 1.92-to-1 ratio on the NYSE and a 1.14-to-1 ratio on the Nasdaq.
The S&P index recorded 30 new 52-week highs and two new lows, while the Nasdaq recorded 32 new highs and 57 new lows.
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