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Wall Street jumps on retailer outlook hikes, ebbing Fed fears

Economy May 26, 2022 10:17PM ET
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© Reuters. FILE PHOTO: A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., May 20, 2022. REUTERS/Andrew Kelly

By Stephen Culp

(Reuters) - Wall Street closed sharply higher on Thursday after optimistic retail earnings outlooks and waning concerns about overly aggressive interest rate hikes by the Federal Reserve put investors in a buying mood.

All three major U.S. stock indexes posted solid gains, with economically sensitive consumer discretionary and microchip stocks beating the broader market.

The tech-laden Nasdaq surged the most - its 2.7% advance was powered by gains in Apple Inc (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) Inc and Amazon.com Inc (NASDAQ:AMZN).

On a weekly basis, the S&P 500, Nasdaq and Dow are on track to snap their longest losing streaks in decades, during which the benchmark S&P plummeted 14.1% and brought it within striking distance of being confirmed as a bear market.

At current levels, all three indexes are poised to notch their biggest weekly gains since mid-March.

"With first quarter earnings essentially over and coming in better than expected, combined with the Fed indicating that they are going to be front-end loading its rate-tightening policy and implying it may pause later in the fall, all of that has given investors reason to feel optimistic," said Sam Stovall, chief investment strategist at CFRA Research in New York.

Upbeat guidance from retailers appeared to offset dour warnings from their peers in recent weeks.

Department store operator Macy's Inc (NYSE:M) jumped 19.3% after raising its annual profit forecast.

Discount chains Dollar General Corp (NYSE:DG) and Dollar Tree (NASDAQ:DLTR) advanced by 13.7% and 21.9%, respectively, following their annual sales forecast hikes, suggesting consumers are shopping for less costly goods amid decades-high inflation.

The minutes from the Federal Open Market Committee's (FOMC) most recent monetary policy meeting calmed fears that the U.S. central bank could turn more hawkish, a concern which has fed into market volatility in recent weeks.

"We have had 65% more daily price moves of 1% or more than the average since WW2," Stovall said.

"If the Fed is too aggressive, they'll choke off inflation but also choke off economic growth," he added. "It's like in the winter you want to tap your brakes, not slam on them, to maintain control and avoid spinning out."

Economic data released on Thursday, including jobless claims, pending home sales and GDP, brought good news wrapped in bad, suggesting the economy is showing just enough softness to prompt a dovish pivot from the Fed by autumn.

The Dow Jones Industrial Average rose 516.91 points, or 1.61%, to 32,637.19; the S&P 500 gained 79.11 points, or 1.99%, to 4,057.84; and the Nasdaq Composite added 305.91 points, or 2.68%, to 11,740.65.

Of the 11 major indexes in the S&P 500, all but real estate ended the session up. Consumer discretionary led the gainers, rising 4.8%, with tech and financials placing and showing at 2.5% and 2.3%, respectively.

Shares of Twitter Inc (NYSE:TWTR) jumped 6.4% on news that the social media company is suing billionaire Elon Musk for delayed disclosure of his stake in the company.

U.S.-listed shares of Alibaba (NYSE:BABA) Group rose 14.8% after the Chinese e-commerce company beat estimates, even as it declined to provide forward guidance in view of COVID-19 restrictions in China.

Advancing issues outnumbered declining ones on the NYSE by a 5.16-to-1 ratio; on Nasdaq, a 2.95-to-1 ratio favored advancers.

The S&P 500 posted three new 52-week highs and 29 new lows; the Nasdaq Composite recorded 28 new highs and 116 new lows.

Volume on U.S. exchanges was 11.43 billion shares, compared with the 13.22 billion average over the last 20 trading days.

Wall Street jumps on retailer outlook hikes, ebbing Fed fears
 

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Comments (28)
James Victorino
James Victorino May 26, 2022 2:18PM ET
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"Upbeat forcasts?" Thank you for making me laugh. Let's not kid ourselves...  Tech company make billions a year. The compensation of the CEOs for these companies are tied into the stock. Bloomberg, WSJ, Barron's, etc. are all paid advertisers for the CEO of these companies. I am sure they also have close relationships with members of the Fed. The economy could be collapsing and these tech companies will pay to have all their lackeys, (yes lackeys), to spin the way they want. To further add insult to injury, the Fed has a special program with a designated account at the treasury dept. that utilizes taxpayers' money to pay proxies to purchase futures contracts in the futures markets so it can manipulate the indices. This was the brainchild of former Fed Governor Robert Heller back in the 80s. Today, GDP came in below estimates. The fact that GDP is a negative for two consecutive months doesn't even appear on the front page of the WSJ.
Kerry Ditto
Kerry Ditto May 26, 2022 1:58PM ET
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Calling all junk stocks for pump?
JR Pierce
JR Pierce May 26, 2022 1:24PM ET
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"Surges" is the word the propagandists used.
David Beckham
David Beckham May 26, 2022 1:20PM ET
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It’s funny to see most retailers lower the forecast but only one raise their forecast then market go up like rocket funny explanation to be honest feel disgusting about media
Levan Jackson
Levan Jackson May 26, 2022 1:20PM ET
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You and me both, have to literally take a shower after reading/listening to the news.
kailash paliwal
kailash paliwal May 26, 2022 1:17PM ET
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down trend started will go in nagative by EOD.😔
jason xx
jason xx May 26, 2022 1:15PM ET
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PCE will decide tomorrow
David Beckham
David Beckham May 26, 2022 1:09PM ET
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It’s ok to see volatility but it’s weird to see people saying some stupid thing. We all know this is casino but it’s writes to use stupid explanations. Also when inflation is still high now we ask for stop rate hike while we only raise 0.75 and not even start qt then why not just keep printing money
First Last
First Last May 26, 2022 1:09PM ET
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"we ask for stop rate hike" --  Who are this "we"?
Mitchel Pioneer
Mitchel Pioneer May 26, 2022 1:00PM ET
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Anyone think the BIGGEST INVESTMENT JOKE IN THE WORLD will tank "in late trade" and give up all the manufactured "gains"?
Matt Kay
Matt Kay May 26, 2022 1:00PM ET
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ha, that does not happen. this day belongs to the algos. Will we see NQ go to 4% on a day? Cause you know all problems are solved...
First Last
First Last May 26, 2022 1:00PM ET
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Why are you asking?  You're always boasting about your predictions.
Ricardo Diogo
Rcd72 May 26, 2022 12:49PM ET
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inflation inflation inflation, and already begging for more "easing" so ridiculous
Ronald Warren
Ronald Warren May 26, 2022 12:49PM ET
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Isn't the first paragraph a kicker? Hey everybody!! It's confirmed! The economy is receding! We won't need higher interest rates.
First Last
First Last May 26, 2022 12:49PM ET
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"easing concerns about aggressive interest rate hikes."
 
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