Stocks Rally on Strong Data Easing Recession Concerns – US Market Wrap

Stocks rose and bonds fell as data on retail spending and the labor market showed the strength of the world’s largest economy, easing concerns that the Federal Reserve was risking a deeper slowdown.

As economic concerns subsided, the S&P 500 extended a six-day rally to 6.6%, the best performance in such a period since November 2022. Walmart Inc., a growth indicator, surged on a positive outlook. Treasury yields rose, led by shorter maturities. Retail sales exceeded expectations, while unemployment claims reached their lowest level since early July. Swap traders further reduced their bets on aggressive Fed easing.

US officials have attempted to use higher interest rates to reduce inflation without causing the economy to contract, a scenario known as a “soft landing.” Alberto Musalem, President of the Federal Reserve Bank of St. Louis, believes the time has come to cut interest rates. His Atlanta counterpart, Raphael Bostic, told the Financial Times that he is “open” to a reduction in September.

The S&P 500 increased by 1.6%. The Nasdaq 100 gained 2.5%. The Russell 2000 index of smaller firms rose 2.5%. The VIX, or “fear gauge” on Wall Street, fell to around 15.