The Dow Jones Industrial Average surged more than 500 points and the Nasdaq Composite rose 2% after July retail sales data showed strong consumer spending, easing concerns that the world’s largest economy could slip into recession in the near future.
The Dow Jones Industrial Average rose 554 points, or 1.4 percent, to 40,563.06.
The S&P 500 rose 1.6%, while the Nasdaq rose 400 points, or 2.3%, marking both indexes’ sixth consecutive positive trading day.
Nine of the S&P 500’s 11 major sectors rose, with consumer discretionary and technology leading the gains.
Retail sales rose 1.0% last month after a downwardly revised 0.2% decline in June, easing concerns about a sharp economic slowdown fuelled by last week’s jump in the unemployment rate.
Retail benchmark Walmart raised its annual profit forecast for the second time this year, sending its shares up 6.6 percent, as Americans flocked to its stores for cheap essentials.
Rival Target also rose 4.4%, while Costco rose 1.7%.
A separate survey also showed an unexpected drop in the number of Americans filing new claims for unemployment benefits last week.
“The wall of concern is starting to crumble as sentiment improves and fundamentals support a risk-on trend,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “Retail sales beat expectations, consumer price inflation is at acceptable levels and the fundamental backdrop is consistent with higher stock prices.”
Two-year and 10-year Treasury yields rose after the data was released, and traders raised their expectations of a 25 basis point rate cut by the Fed to 76.5% from 65% before the data was released.
Investors are focusing on data released this week, the final economic indicators before Fed Chairman Jerome Powell delivers a highly anticipated speech in Jackson Hole next week.
Atlanta Fed President Raphael Bostic told the Financial Times that the bank is ready to cut interest rates in September, while St. Louis Fed President Alberto Mussallem said the time may be approaching for the central bank to start easing monetary policy.
Among other gainers, Cisco Systems Inc. rose 6.8 percent after it forecast better-than-expected first-quarter sales and said it would cut 7 percent of its global workforce.
Billionaire investor Bill Ackman’s new stake in sportswear company Nike sent shares up 5.1%, while Warren Buffett’s Berkshire Hathaway’s acquisition of a stake in cosmetics store chain Ulta Beauty sent shares up 11.2%.
Deere, a maker of agricultural, construction and forestry machinery, saw its shares rise 6.4 percent after the company reported third-quarter profit that beat analyst expectations.
