by Carolina Mandl, Johann M Cherian and Ankika Biswas
(Reuters) – The New York Stock Exchange ended higher on Thursday after the publication of data on retail sales in the United States which gave credence to the hypothesis that the Federal Reserve (Fed) will carry out a easing of its monetary policy.
The Dow Jones index gained 0.91%, or 350.07 points, to 38,774.73 points.
The broader S&P-500 gained 29.05 points, or 0.58%, to 5,029.67 points.
The Nasdaq Composite advanced 47.03 points (0.30%) to 15,906.17 points.
A report from the US Department of Commerce published today shows that retail sales fell more than expected in January, weighed down in particular by the automobile sector – dealerships and gas stations.
The data reassured investors about inflation after the acceleration in consumer prices, indicated in an official report published Tuesday, fueled the idea of inflationary pressures still present and dampened hopes that the Fed soon to a rate cut.
Wall Street then plunged into the red, before rebounding on Wednesday in the wake of solid results from several American companies.
“Investors welcomed a weaker than expected retail sales report,” said Neville Javeri, portfolio manager at Allspring Global Investments. “Maybe consumption is slowing, maybe that contradicts Tuesday’s strong consumer price data.”
Thomas Martin, portfolio manager at GLOBALT, said that “this perhaps shows that the economy is a little weak, and that may be a blessing in disguise because it means that the Fed could be more supportive to lower rates.
The hypothesis of a first rate cut in May has regained some weight in the eyes of traders, who are betting 40% on this scenario. This drop is, however, mostly expected in June, shows CME FedWatch.
Investors are now awaiting the publication of the report on producer prices in the United States on Friday to have additional information on the economy and to try to anticipate the Fed’s position.
Contributing to market optimism, 80.3% of S&P-500 companies reporting quarterly results beat expectations, according to LSEG data.
Among the major sectors of the S&P-500, those that had underperformed recently, such as utilities and energy, posted solid gains on Thursday.
On the value side, note the 2.17% decline in Alphabet after the investment firm Third Point reduced its stake in the technology giant.
If Apple was also put under pressure by Berkshire Hathaway’s decision to sell some of its shares, the apple firm erased part of its losses at the end of the session to fall by only 0.1%. Cisco Systems lost 2.43% after the announcement of a plan to cut jobs around the world and a lowered annual turnover target.
(Written by Jean Terzian)
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