Abigail Somerville
(Reuters) – Wall Street’s main stock indexes closed higher on Thursday, with the Nasdaq rising more than 2 percent, as U.S. retail sales data for July showed strength in consumer spending, easing concerns that the world’s largest economy could slip into recession in the near future.
Nine of the S&P 500’s 11 major sectors rose, led by consumer discretionary and information technology.
Retail sales rose 1.0% after a downwardly revised 0.2% decline in June, easing concerns about a sharp economic slowdown fuelled by last week’s jump in the unemployment rate.
Retail benchmark Walmart raised its full-year profit forecast for the second time this year, sending its shares up 6.58 percent, as Americans flocked to its stores for cheap essentials.
Rivals Target and Costco also rose 4.35% and 1.69%, respectively.
A separate survey also showed an unexpected drop in the number of Americans filing new claims for unemployment benefits last week.
“The wall of concern is starting to crumble as sentiment improves and fundamentals support a risk-on trend,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “Retail sales beat expectations, consumer price inflation is at acceptable levels and the fundamental backdrop is consistent with higher stock prices.”
Two-year and 10-year Treasury yields rose after the data was released, and traders increased their expectations of a 25 basis point rate cut by the Federal Reserve to 76.5% from 65% before the data was released.
Investors are closely watching this week’s economic data releases, the final ones before Fed Chairman Jerome Powell gives a highly anticipated speech in Jackson Hole next week.
The Dow Jones Industrial Average rose 554.67 points, or 1.39%, to 40,563.06, the S&P 500 rose 88.01 points, or 1.61%, to 5,543.22 and the Nasdaq Composite added 401.90 points, or 2.34%, to 17,594.50.
Among other gainers, Cisco Systems Inc. rose 6.8 percent after it forecast better-than-expected first-quarter sales and said it would cut 7 percent of its global workforce.
Nike shares rose 5.07% after billionaire investor William Ackman bought a new stake in the sportswear company, while Warren Buffett’s Berkshire Hathaway bought a stake in the cosmetics chain, sending Ulta Beauty shares up 11.17%.
Advancing issues outnumbered declining ones on the NYSE by a 3.22-to-1 ratio. Advancing issues outnumbered declining ones on the Nasdaq by a 2.66-to-1 ratio.
The S&P 500 posted 30 new 52-week highs and one new low, while the Nasdaq Composite posted 76 new highs and 104 new lows.
(Reporting by Abigail Somerville in New York; Editing by Richard Chang)