Investors were in a buying mood on Thursday as upbeat retail profit forecasts and diminishing fears about the Federal Reserve’s excessively aggressive interest rate hikes prompted Wall Street to close substantially higher.
All three major U.S. stock indexes reported solid gains, with economically sensitive consumer discretionary and technology sectors outperforming the market as a whole.
Apple Inc (NASDAQ:AAPL), Tesla Inc (NASDAQ:TSLA), and Amazon.com Inc contributed to the Nasdaq’s 2.7% increase (NASDAQ:AMZN).
On a weekly basis, the S&P 500, Nasdaq, and Dow are poised to end their longest losing runs in decades, during which the benchmark S&P 500 fell 14.1% and came within striking distance of a bear market.
At current levels, all three indexes are poised for their largest weekly increases since the middle of March.
All of these factors have given investors reason to be optimistic, according to Sam Stovall, chief investment strategist at CFRA Research in New York. “First-quarter earnings were better than expected, and the Fed has indicated that it will be front-loading its rate-tightening policy, implying that it may pause later in the fall,” he said.
In recent weeks, optimistic forecasts from retailers appeared to counteract pessimistic warnings from their competitors.
The share price of department store operator Macy’s Inc (NYSE:M) increased 19.3 percent after the company raised its annual profit prediction.
Dollar General Corp (NYSE:DG) and Dollar Tree (NASDAQ:DLTR) rose by 13.7% and 21.9%, respectively, after raising their annual sales projections, indicating that consumers are shopping for less expensive goods amid decades-long inflation.
The minutes from the Federal Open Market Committee’s (FOMC) most recent monetary policy meeting alleviated market volatility-inducing concerns that the U.S. central bank could become more hawkish.
Since World War II, there have been 65 percent more daily price changes of 1 percent or more than the average.
“If the Fed is excessively active, it will suffocate both inflation and economic development,” he continued. “In the winter, you should tap your brakes rather than slam on them to maintain control and prevent skidding.”
The economic statistics reported on Thursday, including unemployment claims, pending home sales, and GDP, had both good and bad news, indicating that the economy is showing just enough slack to force a dovish flip by the Federal Reserve in the fall.
The Dow Jones Industrial Average increased by 516.91 points, or 1.61 percent, to 32,637.19; the S&P 500 jumped by 79.11 points, or 1.99 percent, to 4,057.84; and the Nasdaq Composite soared by 305.91 points, or 2.68 percent, to 11,740.65.
Except for the real estate index, all eleven major S&P 500 indexes closed the session higher. The consumer discretionary sector topped the gainers with a 4.8% increase, followed by the technology and finance sectors at 2.5% and 2.3%, respectively.
Twitter Inc (NYSE:TWTR) shares rose 6.4% on the announcement that the social media business is suing Elon Musk for delayed disclosure of his ownership in the company.
Alibaba (NYSE:BABA) Group’s U.S.-listed shares increased 14.8% as the Chinese e-commerce business beat estimates, but declining to issue forward guidance due to COVID-19 restrictions in China.
On the NYSE, advancing issues outweighed declining ones by a ratio of 5.16 to 1; on the Nasdaq, the ratio was 2.95 to 1.
The S&P 500 had three new 52-week highs and 29 new lows, while the Nasdaq recorded 28 new highs and 116 new lows.
Volume on U.S. exchanges was 11.43 billion shares, compared to the 20-day average of 13.22 billion shares.