New York Wall Street Rises on Positive Economic Reports
NEW YORK — Wall Street rose Thursday after a blizzard of reports suggested the U.S. economy is still humming, though inflation may be too.
Positive Market Performance
The S&P 500 climbed 0.8% for its best day in two weeks. The Dow Jones Industrial Average rallied 331 points, or 1%, and the Nasdaq composite added 0.8%.
Bond Market Activity
Some of the strongest action was in the bond market, where Treasury yields swung up and down several times. While the reports bolstered hopes the U.S. economy will avoid a deep recession, the strength underlying them could also add upward pressure on inflation.
Increased Retail Spending
One report said U.S. shoppers spent more at retailers last month than economists expected. Such spending has been a linchpin for the economy, but it could also encourage retailers to keep trying to raise prices further.
Resilient Job Market
The strong spending is a result of a remarkably resilient job market, which has withstood a steep jump in interest rates. A separate report Thursday morning said fewer workers applied for unemployment benefits last week than expected, which implies the number of layoffs remains low.
A third report said prices getting paid at the wholesale level rose more last month than economists expected. That could be a discouraging signal for households if the higher-than-expected inflation gets passed on to shoppers at the consumer level.
Federal Reserve’s Role
To try to get inflation back down to its 2% target, the Federal Reserve has been increasing interest rates sharply since early last year. The hope on Wall Street is that a slowdown in inflation since last summer means the Fed is done with its rate hikes, which slow the economy and hurt investment prices.
Treasury yields initially jumped following Thursday’s reports on fears they could push the Fed to raise rates again or at least to keep rates higher for longer. But economists pointed out much of last month’s acceleration in wholesale inflation was due to higher fuel prices, which can shift direction sharply and quickly.
Stock Market Performance
In the stock market, shares of chip designer Arm Holdings jumped 24.7% in their debut. The strong welcome could be an encouraging signal for the IPO market, which has slowed since the stock market began tumbling early last year on fears about higher interest rates.
Energy Producers and Airlines
Stocks of energy producers also rose, thanks to another rally for oil prices. Crude has been climbing for months as oil-producing countries try to support its price by curtailing their supplies. A barrel of U.S. crude rose back above $90, helping ExxonMobil to climb 1.8% and Marathon Oil to rise 2.9%. Delta Air Lines, meanwhile, became the latest airline to cut its profit forecast because of higher costs. It said higher-than-expected costs for fuel and maintenance are cutting into its earnings, and its stock slipped 0.6%.
Global Market Performance
In stock markets abroad, indexes rose in Europe after the European Central Bank raised its key interest rate to a record high but also made statements seen as hinting that it won’t raise rates again for a while. France’s CAC 40 rose 1.2%, and Germany’s DAX returned 1%. Indexes also climbed across much of Asia, with Japan’s Nikkei 225 up 1.4%.
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.