Stock Market Today-07/15: Stocks Rise After Strong Retail Sales in June

Updated at 11:48 a.m. EST

U.S. stocks rose firmly on Friday as investors sought to snap a five-day losing streak amid easing bets on a massive Fed rate hike later this month and strong reading June retail sales which underscored the strength of the US consumer.

Stocks also hold onto premarket gains, despite Wells Fargo’s weaker-than-expected earnings (WFC) – Get the Wells Fargo & Company reportwhich followed its great rival JPMorgan (JPM) – Get the JP Morgan Chase & Co. report. setting aside large numbers to cover potential increases in bad debts as the general economic outlook deteriorates.

from Citigroup (VS) – Get the report from Citigroup Inc. Surprisingly strong second-quarter earnings also contributed to cautious optimism as the lender set aside a smaller portion of its profits to cover rising default risks.

Retail sales were also impressive, rising 1% in June to a total of $680.6 billion, the Commerce Department said, easily beating Street’s consensus forecast of a 0.8 gain. %.

Recession fears remain front and center overseas, however, after a much weaker-than-expected second-quarter GDP reading from China showed the world’s largest economy narrowly avoided contraction with growth of only 0.4%.

It’s the slowest – apart from the direct Covid hit in the first quarter of 2020 – for at least thirty years and raises big questions about the impact of its broader health policies as it approaches the second half of the year.

However, the data failed to contain global oil prices in overnight trading as investors offset lower demand from the world’s largest energy importer and focused on the controversial visit of the President Joe Biden in Saudi Arabia.

Biden will meet King Salman bin Abdulaziz on Friday, as well as Crown Prince Mohammed bin Salman as part of his broader visit to the Middle East, organized in part to discuss energy policy with the world’s largest oil producer.

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Biden is expected to push the Kingdom – which he called a “pariah state” during his 2019 election campaign – to use his influence with the OPEC cartel to boost production and offset the impact of sanctions imposed on Russian crude exports. He is not, however, expected to raise the issue of Jamal Khashoggi, a Washington Post reporter who was murdered by Saudi Crown Price agents in 2018.

U.S. markets, however, are looking cautiously positive ahead of a key June retail sales reading ahead of the start of trading and some soothing remarks from Fed Governor Christopher Waller and St. Louis Fed Chairman James Bullard, who both indicated their preference for a 75 basis point rate hike at the next Fed meeting starting July 26.

“So far we’ve defined that mostly as 50 to 75 at this meeting,” Bullard told the Nikkei Business Newspaper. “I think 75 has a lot of virtue, because the committee’s long-term neutrality, according to the summary of economic projections, is actually about 2.5 percent.”

The CME Group’s FedWatch, which put the probability of a 100 basis point hike at almost 90% after the shocking inflation reading of 9.1% in June, now only indicates a probability of 46.4%.

Still, Fed rate hikes are set to be large and ongoing as the central bank steps up its fastest fight against inflation in four decades, and bond markets are betting the cost of its control will tip the domestic economy in the recession.

Benchmark 2-year Treasury yields were trading at 3.105% in New York, compared to 2.915% for 10-years, maintaining the so-called “inversion” of the yield curve – an accurate predictor recession – to the steepest since December 2000.

On Wall Street, the S&P 500 rose 68 points late in the morning while the Dow Jones Industrial Average jumped 621 points, thanks in part to another strong quarterly earnings report from UnitedHealth Group. (A H) – Get UnitedHealth Group Incorporated (DE) report. The tech-focused Nasdaq gained 170 points.

Shares of UnitedHealth Group rose 5.33%, adding about 180 points to the Dow Jones, after posting better-than-expected second-quarter earnings and raising its full-year profit forecast as revenues from its Optum healthcare solutions division continued to rise on leading gains. .

Citigroup rose 10.1% after its strong second-quarter results, while Wells Fargo gained 6% after reporting weaker-than-expected second-quarter results as the group set aside more than half a billion dollars to cover bad debt losses over the next few months.

pinterest (PINS) – Get Class A report from Pinterest Inc. shares, meanwhile, jumped 15% after the Wall Street Journal reported that activist investors Elliott Management had amassed a stake of more than 9% in the social media group.

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