Stock market today: Wall Street rallies as US shoppers help drive the economy

NEW YORK (AP) — Wall Street is rallying Thursday following signals the U.S. economy is holding up better than expected,…

NEW YORK (AP) — Wall Street is rallying Thursday following signals the U.S. economy is holding up better than expected, with particular credit going to the country’s shoppers.

The S&P 500 was up 1.1% in early trading and on track for a sixth straight gain as the U.S. stock market rights itself following a scary few weeks. It’s back to within 3% of its all-time high set last month after earlier falling nearly 10% below it.

The Dow Jones Industrial Average was up 507 points, or 1.3%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 1.3% higher.

Treasury yields leaped in the bond market following the encouraging economic data. One report said U.S. shoppers increased their spending at retailers last month by much more than economists expected, while another said fewer U.S. workers applied for unemployment benefits.

A year ago, such reports could have sent the stock market reeling on worries they could signal a worsening of inflation. But good news on the economy is once again good news on Wall Street, particularly after a report earlier this month showed U.S. employers pulled back on their hiring by much more than expected.

That dud of a jobs report raised worries the U.S. economy’s growth could be buckling under the weight of high interest rates brought by the Federal Reserve, and it helped contribute to turmoil in stock markets worldwide. But Thursday’s reports hint that a perfect landing may still be possible, one where the Fed slows the economy’s growth by just enough to stifle inflation but not so much that it causes a recession.

“The growth scare isn’t over, but it’s a little less scary,” said Brian Jacobsen, chief economist at Annex Wealth Management.

Walmart added to the optimism after it delivered a bigger profit for the spring than analysts expected. The retail giant also raised its forecasts for sales and profit over the full year. Walmart’s shares jumped 7.7%.

Other big companies likewise joined the parade that’s built of businesses topping analysts’ expectations for springtime profit.

Tapestry rose 5.4% after the company behind the Coach and Kate Spade brands reported stronger profit than expected.

Cisco System’s profit and revenue for the latest quarter squeaked past analysts’ forecasts, and its stock jumped 9.5% after the maker of networking equipment also said it would cut thousands of jobs as it shifts to faster-growing areas of technology.

Ulta Beauty’s stock rose 10.6% to help lead the market after Warren Buffett’s Berkshire Hathaway revealed it has built an ownership stake in the retailer.

In the bond market, the 10-year yield clambered up to 3.93% from 3.84% following the strong economic data.

The two-year Treasury yield, which more closely follows expectations for action by the Federal Reserve, jumped to 4.09% from 3.96%.

Traders are still widely expecting the Federal Reserve to cut its main interest rates at its next meeting in September, which would be the first such cut since the 2020 COVID crash. But they’re now largely expecting the Fed to lower rates by the traditional quarter of a percentage point, instead of the more severe half-point that many traders were expecting just a week ago.

The Fed has been clear about the tightrope it began walking when it started hiking rates sharply in March 2022: Being too aggressive would choke the economy, but going too soft would give inflation more oxygen and hurt everyone.

In stock markets abroad, indexes rose in Europe following more modest moves across much of Asia. Japan’s Nikkei 225 rose 0.8% after data showed its economy returned to growth during the spring.

The U.K. economy also grew during the latest quarter, a welcome signal following a rough run, and the FTSE 100 rose 0.8% in London.

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AP Business Writer Yuri Kageyama contributed.