NEW YORK: Wall Street’s main indexes jumped on Thursday, with the Nasdaq rising 2% after US retail sales data for July indicated resilient consumer spending, allaying fears of an imminent recession in the world’s largest economy.
Tesla was the top gainer among megacap and growth stocks, leading the pack with a 6.1% advance.
Nine of the 11 major S&P 500 sectors were trading higher, with Consumer Discretionary and Technology rising 3% and 2.1%, respectively.
Retail sales increased 1.0% last month after a downwardly revised 0.2% drop in June, easing fears of a sharp economic slowdown fanned by a jump in the unemployment rate last week.
Meanwhile, retail bellwether Walmart added 6.4% after raising its annual profit forecast for the second time this year as Americans flocked to its stores for inexpensive essentials.
Rival Target also jumped 4.3%, while Costco advanced 1.1%.
A separate reading also showed the number of Americans filing new applications for unemployment benefits fell unexpectedly last week.
“Today’s retail sales data and jobless claims offer yet more evidence that recession risk remains low in the US even as the economy decelerates from unsustainably strong growth levels,” said Ronald Temple, chief market strategist at Lazard.
“The case for the Fed to ease by 25 basis points is rock solid, but there is little evidence to suggest a need for a 50 basis point reduction.”
The yield of the two-year and 10-year Treasury notes rose after the data, with traders increasing bets for a 25-basis-point rate cut by the Federal Reserve to 76.5%, versus 65% before the data. 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-awaited speech at Jackson Hole next week.
Atlanta Fed President Raphael Bostic told the Financial Times he was open to an interest-rate cut in September, while St. Louis Fed chief Alberto Musalem said the time for the central bank to start easing monetary policy might be near.
The S&P 500 and the Nasdaq extended their winning streaks on the day to six sessions, hovering near levels last seen two weeks ago, when global equity markets were hit hard by concerns of a possible US recession following a dour jobs report.
At 11:38 a.m. ET, the Dow Jones Industrial Average rose 458.42 points, or 1.15%, to 40,466.81, the S&P 500 gained 74.19 points, or 1.36%, to 5,529.40 and the Nasdaq Composite gained 343.90 points, or 2.0%, to 17,536.51.
Among other movers, Cisco Systems rose 7.3% after it forecast better-than-expected first-quarter revenue and said it was cutting 7% of its global workforce.
Nike climbed 3.7% as billionaire investor William Ackman built new stakes in the sportswear company, while Ulta Beauty jumped 11.2% after Warren Buffett’s Berkshire Hathaway acquired a stake in the cosmetics store chain.
Deere & Co gained 6.6% after the farm, construction and forestry equipment maker beat analysts’ expectations for third-quarter profit.
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