Stocks Surge After Encouraging Economic Data Releases, Strong Earnings Reports.

U.S. stocks moved sharply higher Thursday morning after the release of a fresh batch of data that eased concerns about the health of the economy, while retailer Walmart (WMT) and tech giant Cisco (CSCO) soared after reporting strong earnings.

The S&P 500 and Nasdaq Composite were up 1.1% and 1.7%, respectively, while the Dow Jones Industrial Average added 1%. The S&P 500 and Nasdaq are riding five-session winning streaks amid optimism that the Federal Reserve will soon cut interest rates and the economy will avoid slipping into recession.

The technology and consumer discretionary sectors were showing the biggest gains on the S&P 500 following the earnings reports and the encouraging economic data.

A monthly report on retail sales came in better than expected and illustrated the continued strength of the U.S. consumer, while weekly jobless claims came in lower than expected, alleviating concerns about a weakening in the labour market. The data on Thursday, which paint a picture of a resilient economy, follow inflation reports released yesterday that showed an easing of consumer price pressures.

Taken together, the data reinforce the idea that the Fed will be in a position to start cutting interest rates soon but will be doing so because inflation has moderated, not in response to a dramatic weakening of the economy. Earlier in the month, a weak July jobs report had heightened expectations that the economy could be headed toward a recession and the Fed would be forced to respond aggressively.

Investors will also be keeping close tabs on comments from Fed officials who are scheduled to speak later Thursday for clues on how the latest economic numbers feed into the central bank’s decision on rate cuts. The Fed has said it could start cutting rates as soon as September if data comes in as expected.

Among stocks on the move Thursday, shares of Dow component Walmart were up 7% at an all-time high after the retail giant reported better-than-expected quarterly revenue and boosted its outlook. Fellow Dow component Cisco was up about 9% after releasing a strong earnings report and announcing job cuts.

Big tech stocks, which have been particularly volatile recently, were mostly higher in early trading Thursday, led by a 3% gain for Amazon (AMZN). Microsoft (MSFT), Apple (AAPL), Meta Platforms (META), and Nvidia (NVDA) also gained ground, while Alphabet (GOOG) was flat.

The yield on 10-year Treasurys, which is sensitive to expectations around interest rate cuts, rose to 3.95%, its highest point in a week.

Gold futures were up slightly at around $2,485 an ounce, while bitcoin was holding steady at around $59,000.

Source: https://www.investopedia.com/dow-jones-today-08152024-8695726