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Retailer Results Boost US Stocks 05/26 16:04
Stocks closed broadly higher on Wall Street Thursday as investors cheered a
strong set of quarterly results from Macy's and other retailers.
NEW YORK (AP) -- Stocks closed broadly higher on Wall Street Thursday as
investors cheered a strong set of quarterly results from Macy's and other
retailers.
The S&P 500 rose 2% and is on pace for its first weekly gain after seven
straight losses, its longest such stretch since 2001.
The Dow Jones Industrial Average rose 1.6% and the Nasdaq gained 2.7%.
Smaller company stocks also made strong gains, a sign of bullishness on the
economy.
Bond yields rose. The yield on the 10-year Treasury, which helps set
interest rates on mortgages, rose to 2.75% from 2.74% late Wednesday.
Roughly 90% of the stocks in the S&P 500 rose, with technology companies,
banks and retailers driving much of the rally. While trading has remained
choppy this week, the market has mostly pushed higher, unlike the past five
weeks, when the S&P 500 had a pullback of 2% or more at least one day each week.
"It's nice to see a couple days in the green, and this might actually end up
being the first week when we don't have a humongous down day," said Liz Young,
head of investment strategy at SoFi. "But I wouldn't declare premature victory
and assume we're in the clear."
The S&P 500 rose 79.11 points to 4,057.84. The Dow added 516.91 points to
32,637.19, and the Nasdaq rose 305.91 points to 11,740.65.
The Russell 2000 index of smaller companies climbed 39.07 points, or 2.2%,
to 1,838.24.
Retailers led the broader market higher Thursday. Macy's surged 19.3% after
it raised its profit forecast for the year following a strong first-quarter
financial report. Dollar General vaulted 13.7% and Dollar Tree jumped 21.9% for
the biggest gain in the S&P 500 after the discount retailers reported solid
earnings and gave investors encouraging forecasts.
The retail sector is being closely watched by investors looking for more
details on just how much pain inflation is inflicting on companies and
consumers. Weak reports from the several big companies last week, including
Target and Walmart, spooked an already volatile market.
"We're not convinced that we're completely out of the woods here," said
Philip Orlando, chief equity market strategist at Federated Hermes. "There were
a lot of negative reports last week and what those companies have talked about
is what is going on through the economy."
Inflation is at a four-decade high and businesses have been raising costs on
everything from food to clothing to offset higher costs. The impact from
Russia's invasion of Ukraine worsened inflation pressures by fueling higher
energy and key food commodity costs. Supply chain problems worsened in the wake
of China's lockdown for several major cities as it tried to contain COVID-19
cases.
Consumers have been resilient about spending, but the pressure from
inflation remains persistent and could be prompting a pullback or shift in
spending from more expensive things to necessities.
The broad gains on Thursday follow a late push for markets on Wednesday
prompted by details from the Federal Reserve's latest meeting, which confirmed
expectations of more interest rate hikes.
Investors have been uneasy over the impact of higher interest rates in the
United States and other Western economies that are meant to cool surging
inflation. The key concern is whether the Fed can temper inflation without
crimping economic growth to the point that the U.S. falls into a recession.
"The Fed's got to be really aggressive here and job number one is to stuff
the inflation genie back in the bottle and I don't believe the market has fully
priced that in," Orlando said.
Technology stocks also rose. TurboTax maker Intuit rose 4.6%. Companies in
the sector, with their lofty stock values, tend to push the market harder up or
down.
Airline stocks rallied on encouraging summer travel forecasts. Southwest
Airlines rose 6% and JetBlue rose 3.4%.
U.S. crude oil prices rose 3.4% and are up more than 55% for the year.
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