A trader works on the floor of the New York Stock Exchange.
NYSE
Stocks rallied on Thursday as investors regained confidence in the economy following encouraging consumer and labor data that helped ease recession worries.
The Dow Jones Industrial average leaped 409 points, or 0.89%. The S&P 500 rose 1.22%, for its sixth straight gain. The Nasdaq Composite jumped 1.89%.
Retails sales increased 1% in July, far surpassing an estimate from Dow Jones that forecast a 0.3% uptick. Also separately, weekly jobless claims fell for the week. The data served as a boon to investors and a broader market trying to mount a comeback from an August rout tied to concerns about a slowing economy that arose following July’s disappointing jobs report on August 2nd.
After a 3% gain this week, the S&P 500 is now less than 3% below its record. The three major U.S. indexes are now trading above their Aug. 2 closing level, which was the session before the global stock market rout on Aug. 5 that was largely driven by investors’ concerns about an economic slowdown and an unwinding of a popular hedge fund currency trade.
“Today’s solid retail sales and claims data is a reminder that the sky is not falling on the U.S. economy,” Wolfe Research chief economist Stephanie Roth wrote on Thursday. “Yes, economic momentum has cooled, but we don’t appear to be headed for recession imminently.”
Encouraging inflation data this week had largely swept away investors’ recessionary fears prior to Thursday’s swath of economic data, and led to a rebound in equities following last week’s sharp global sell-off.
Dow component Walmart added to the momentum, with a raised outlook and an earnings report that topped analyst estimates, sending shares up more than 6%. Elsewhere, Cisco Systems jumped more than 8% after announcing a fiscal fourth-quarter earnings and revenue beat and cuts to its global workforce.
Stocks climbed on Wednesday after the consumer price index reflected a slowing annual inflation rate of 2.9%, the lowest since 2021. That data — coupled with a key measure of wholesale inflation released Tuesday that rose less than expected — has reassured investors that an economic soft landing is back on the table and that the Federal Reserve will likely lower interest rates at the central bank’s September meeting.