(New York=Yonhap News) Jin Jung-ho Yonhap Infomax Correspondent = The New York stock market continued its rally with a sharp rise. The U.S. consumer index exceeded expectations, alleviating concerns of stagnation.
On the 15th (U.S. Eastern Time), the Dow Jones Industrial Average on the New York Stock Exchange (NYSE) closed at 40,563.06, up 554.67 points (1.39%) from the previous session.
The S&P 500 index rose 88.01 points (1.61%) to 5,543.22, and the Nasdaq Composite index surged 401.89 points (2.34%) to 17,594.50.
U.S. retail sales in July unexpectedly increased, and weekly new jobless claims decreased for the second consecutive week, prompting stock investors to cheer.
According to the U.S. Department of Commerce, U.S. retail sales in July rose 1% from the previous month to $709.7 billion, significantly exceeding market expectations of a 0.4% increase. This figure is a significant improvement compared to a 0.2% decrease from the previous month.
Weekly new jobless claims also fell below expectations.
According to the U.S. Department of Labor, the seasonally adjusted number of new jobless claims for the week ending on August 10 was 227,000, down 7,000 from the previous week. This number also surpassed the market expectation of 236,000.
Retail sales in the U.S. represent two-thirds of the U.S. economy’s purchasing power, making it a key indicator. Strong consumer spending and stable employment helped alleviate fears as the financial markets had collapsed in panic.
Richard De Chazal, a macroeconomic analyst at William Blair, commented on the retail sales data, stating, “Once again, evidence has emerged that U.S. consumers can positively surprise the market,” and that “the report clearly shows that U.S. consumers are not on the brink of collapse.”
Major essential consumer goods company Walmart also stimulated buying sentiment by delivering results that exceeded market expectations.
Walmart announced revenues for the last quarter increased by 4.8% year-on-year to $169.34 billion. Adjusted earnings per share (EPS) also increased by 9.8% year-on-year to $0.67. Both revenue and EPS easily surpassed market expectations.
In response to these results, Walmart’s stock price surged by over 6% that day.
The ‘Magnificent 7’ stocks representing seven giant tech companies also showed strength. Nvidia rose by over 4% that day, solidifying its position as a market leader, while Meta Platforms also joined the trend with a 2% gain. Tesla jumped by 6.34%.
Amid news that the U.S. Department of Justice is considering antitrust violations and potential business unit divestitures, Alphabet, which fell the previous day, also recorded strong gains that day.
AI and semiconductor-related stocks surged.
Companies like Broadcom (5.35%), ASML (5.53%), AMD (4.70%), Qualcomm (3.70%), Arm Holdings (3.59%), Micron Technology (6.51%), and Lam Research (5.30%) saw larger gains compared to other sectors.
Major cosmetics retailer Ulta Beauty surged by more than 11% after it was revealed that Warren Buffett’s Berkshire Hathaway bought over 690,000 shares of the company in the last quarter.
Cisco, a major telecommunications equipment provider, rose by over 6% after announcing better-than-expected performance and restructuring plans.
Deere & Company, the world’s largest manufacturer of agricultural and construction equipment, saw its stock price rise by over 6% thanks to strong performance.
Chris Rakan, investment analyst at Morgan Stanley, commented, “As more indicators like today’s come out, concerns about a downturn in the U.S. economy are expected to diminish,” adding that “pressure on the Federal Reserve to ‘lower interest rates more aggressively’ may weaken.”
Stephanie Ross, senior economist at Wolf Research, stated, “Today’s strong retail sales and unemployment claims reminded us that the sky is not falling on the U.S. economy,” and that “while economic momentum may be cooling, it is not immediately heading towards a recession.”
With retail sales showing strength that day, bets on the Federal Reserve cutting rates by 50 basis points in September lost much of their momentum.
According to CME’s FedWatch tool, the federal funds rate futures market pegged the probability of a 25 basis point rate cut in September at 74.5% by the end of that day, while bets on a 50 basis point cut fell to 25.5%.
Alberto Musalem, President of the Federal Reserve Bank of St. Louis, stated in a public speech that “the time for policy rate changes is approaching” based on inflation moderation, adding that “the labor market is no longer overheating and there are no clear upward inflation risks.”
U.S. import prices rose slightly in July.
According to the U.S. Department of Labor, the U.S. import price index rose by 0.1% in July compared to the previous month, contrary to market expectations of a 0.1% decrease.
The Federal Reserve announced that industrial production decreased by 0.6% on a seasonally adjusted basis compared to the previous month in July. This was the first decline since March of this year.
By sector, only real estate and utilities recorded slight declines, while the rest all rose. Consumer staples surged by 3.38%, leading the gains, with industrial, materials, and technology sectors all rising by over 1%.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) closed at 15.23, down 0.96 points (5.93%) from the previous session.
jhjin@yna.co.kr