Wall Street Reaches New Records Following Retail Sales Data
Excited by signs of economic strength and bets on rate cuts, traders propelled the Dow Jones index to its best day in a year.
All three major Wall Street indices surged to new record highs on Tuesday. Buoyed by signs of economic resilience and expectations of rate cuts, traders drove the flagship Dow Jones index up by 1.85% to 40,954.48 points. The broader S&P 500 index rose 0.64% to 5,667.2 points, while the tech-heavy Nasdaq edged up 0.20% to 18,509.34 points.
U.S. retail sales in June showed no change, surpassing expectations of a 0.3% decline after a revised 0.1% growth in May, now adjusted to 0.3%. This data highlighted resilience in the world’s largest economy.
Furthermore, the market was buoyed by comments from Federal Reserve (Fed) Chairman Jerome Powell, who expressed confidence in combating inflation and indicated the Fed would not wait for pressures to reach 2% before cutting rates.
Although retail sales figures did not fully support rate cut expectations, they underscored the economy’s solidity amidst a successful inflation-taming process, paving the way for potential rate cuts in the upcoming Fed meeting.
According to CME Group’s Fed Watch tool, futures markets are pricing in a 90.4% probability of a 25 basis point rate cut by the Fed in September, potentially lowering rates to a range of 5.25% to 5.00%.
While retail sales data may not decisively influence the Fed’s rate decision, it provides reassurance that the U.S. economy is not heading toward a recession.
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