Stocks were continuing to rally Tuesday, after retail sales rose in April, and markets awaited commentary from Federal Reserve Chairman Jerome Powell.
Shortly after the open, the
Dow Jones Industrial Average
climbed 348 points, or 1.1%. The
rose 1.5%, with the technology-stock heavy
The good news is that “a solid retail sales report…painted a picture of a strong US consumer that could probably tolerate rising food and energy prices a little while longer,” wrote Edward Moya, senior market analyst at Oanda.
Overall, the indexes have been trying to rebound from the depths of their correction this year. Since a Thursday afternoon low point, the S&P 500 has risen roughly 5%, including the index’s gain Tuesday. Helping spur the move were comments from Powell implying that the Fed won’t lift short-term interest as quickly as some fear to reduce high inflation. All three major indexes are up from Thursday afternoon but are down double digits in percentage terms for the year.
On Tuesday, the Census Bureau reported that retail sales for April rose 8.2% year-over-year, higher than March’s gain of 7.3%. The result shows that “the consumer is still very strong,” wrote Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
That bad news is that “much of the increase is from higher prices,” wrote Jeffrey Roach, chief economist for LPL Financial. That means that, while consumers were spending a lot of money as prices rose, the higher prices are holding them back from buying a greater number of items. So inflation may have just begun to eat into consumer demand.
That would put more pressure on the Federal Reserve to lift short-term interest rates rather quickly. Currently, markets expect the central bank to hike rates by a half a percentage point at each of the next few meetings, but if inflation is becoming more of a problem now, the Fed could lift rates by three quarters of a point.
“The problem with a strong consumer outlook is that it also means the Fed tightening won’t have to ease up anytime soon,” Moya wrote.
Powell might have his say about that later in the day. He will be interviewed by The Wall Street Journal this afternoon, and while he has insisted that the Fed isn’t considering a three quarter of a point hike, markets will be listening carefully to see if that has changed.
Another factor that is helping the stock market Tuesday: news that Hong Kong would ease Covid-19 curbs this week, with Shanghai on track to exit lockdowns at the beginning of June. That could make supplies more available for companies to buy, potentially easing cost pressures.
Overseas, the pan-European
surged 1.1%. Hong Kong’s
Index rallied 3.3%.
Here are six stocks on the move Tuesday:
U.S.-listed Chinese tech stocks surged amid news that regulators in Beijing were getting closer to easing regulatory pressures on the country’s tech sector.
(ticker: BABA) climbed 7.4%, with
(NIO) up 11%.
(TWTR) initially fell, then rose 0.2% after
provides proof that the number of spam or bot users on the site is less than 5%.
(WMT) stock dropped 8.4% after the company reported a profit of $1.30 a share, missing estimates of $1.48 a share, on sales of $141.6 billion, above expectations for $138.9 billion.
Advanced Micro Devices
(AMD) stock gained 5.7% after getting upgraded to Overweight from Neutral at Piper Sandler.