Wall Street Ends Higher Amid Hopes for Rate Cuts
Retail Sales Slump Spurs Optimism for Rate Cuts
U.S. stocks closed higher on Thursday, driven by a decline in retail sales data that fueled hopes of impending interest rate cuts by the Federal Reserve. The Commerce Department reported a 0.8% drop in U.S. retail sales in January, primarily due to decreases at auto dealerships and gasoline service stations.
Investor Reaction to Retail Sales Data
The weaker-than-anticipated retail report was received positively by investors, with some interpreting it as a sign of a potential economic slowdown. This sentiment led to increased optimism about the likelihood of the Fed cutting rates in the near future.
Market Expectations for Rate Cuts
Market expectations for a rate cut of at least 25 basis points in May edged up to 40%, while the odds for June stood at roughly 79%, according to the CME Group’s FedWatch Tool. Additionally, a Labor Department report showed initial claims for state unemployment benefits were lower than estimated, further contributing to positive market sentiment.
Market Performance
The S&P 500 gained 29.05 points, the Nasdaq Composite gained 47.03 points, and the Dow Jones Industrial Average rose 350.07 points. Notable stock movements included Alphabet dropping 2.17%, Apple facing pressure due to stake reductions, and CBRE Group soaring 8.5% after forecasting annual profit largely above estimates.
Company Performance and Sector Movement
- Wells Fargo jumped 7.2% after the U.S. Office of the Comptroller of the Currency terminated a 2016 consent order.
- Recently underperforming sectors such as utilities, materials, and energy notched strong gains, and the small-cap Russell 2000 Index also advanced 2.3%.
- Cisco Systems fell 2.43% after announcing plans to cut 5% of its global workforce and lowering its annual revenue target.
- Deere & Co, the world’s largest farm-equipment maker, lost 5.2% after cutting its 2024 profit forecast.
Market Activity and Trading Volume
Advancing issues outnumbered decliners on the NYSE and Nasdaq, and 12.24 billion shares changed hands on U.S. exchanges. These figures reflected a positive market outlook and increased trading activity.
