Stock Market Today surged as positive consumer and labor data boosted investor confidence in the economy, easing fears of a potential recession.
The Dow Jones Industrial Average jumped 554 points, or 1.39%, closing at 40,563.06. The S&P 500 also gained 1.61% to end at 5,543.22, marking its sixth consecutive day of gains. The broad market index has now climbed about 8% from its lowest point on August 5. Meanwhile, the Nasdaq Composite soared 2.34% to finish at 17,594.50.
Retail sales in July exceeded expectations, rising by 1% compared to the 0.3% increase forecasted by Dow Jones. Additionally, weekly jobless claims dropped, further boosting investor sentiment and helping the market recover from an August slump triggered by concerns over economic slowdown after a disappointing jobs report on August 2.
With more than a 3% rise this week, the S&P 500 is now just 2% below its all-time high. The major U.S. indexes have also surpassed their closing levels from August 2, the day before a global stock market rout on August 5 fueled by worries about economic slowdown and the unwinding of a popular hedge fund currency trade.
“Today’s strong retail sales and jobless claims data remind us that the U.S. economy isn’t on the brink of collapse,” said Stephanie Roth, chief economist at Wolfe Research, on Thursday. “While economic momentum has slowed, we’re not heading for an immediate recession.”
Earlier in the week, encouraging inflation data had already started to calm recession fears, leading to a rebound in the stock market after last week’s steep global sell-off.
Adding to the market’s momentum, Walmart reported better-than-expected earnings and raised its outlook, sending its shares up 7%. Cisco Systems also saw a 7% jump after posting strong fiscal fourth-quarter earnings and revenue, along with announcing global workforce reductions.
On Wednesday, stocks rose after the consumer price index showed the annual inflation rate slowing to 2.9%, the lowest since 2021. This, combined with lower-than-expected wholesale inflation data released earlier in the week, reassured investors that the economy might achieve a soft landing, increasing the likelihood that the Federal Reserve will cut interest rates at its September meeting.
Stock Market Todays News (FAQs)
What caused the stock market to rally on Thursday?
The stock market rallied due to encouraging consumer and labor data, including a stronger-than-expected increase in retail sales and a drop in weekly jobless claims, which eased fears of an impending recession.
Why did retail sales data have such a positive impact on the market?
Retail sales data far exceeded expectations, signaling strong consumer spending, which is a key driver of economic growth. This helped reassure investors about the health of the economy.
How did inflation data contribute to the stock market’s recovery?
The recent inflation data showed a slowing annual inflation rate, suggesting that inflationary pressures are easing. This increased investor confidence that the economy could achieve a soft landing, reducing the likelihood of aggressive interest rate hikes by the Federal Reserve.
What role did major companies like Walmart and Cisco play in the stock market rally?
Walmart and Cisco both reported better-than-expected earnings, with Walmart raising its outlook and Cisco announcing job cuts along with strong earnings. These positive corporate results further boosted investor sentiment and contributed to the market’s gains.
Why are investors no longer as concerned about a recession?
Recent economic data, including strong retail sales, lower jobless claims, and easing inflation, have led investors to believe that the economy is stabilizing and that a recession may not be imminent, reducing recession-related fears.
How did the Dow Jones, S&P 500, and Nasdaq perform in response to the economic data?
The Dow Jones surged by 554 points (1.39%), the S&P 500 rose by 1.61%, and the Nasdaq jumped by 2.34%, reflecting strong investor confidence following the positive economic data.
What is the significance of the S&P 500 being just 2% below its record high?
The S&P 500 being only 2% below its record high indicates that the market has recovered much of its recent losses, showing resilience and renewed investor optimism about the economy’s future prospects.