NEW YORK (AP) — Wall Street rallied to one of its best days of the year Thursday after data showed the U.S. economy is holding up better than expected, with particular credit going to the country’s shoppers.
The S&P 500 jumped 1.6% for its fourth-best day of the year and its sixth straight gain as the U.S. stock market rights itself following a scary few weeks. It’s back to within 2.2% of its all-time high set last month after briefly falling close to 10% below it.
The Dow Jones Industrial Average rose 554 points, or 1.4%, while the Nasdaq composite burst 2.3% higher as Nvidia and other Big Tech stocks recovered more of their stumbles from the last month.
Treasury yields also leaped in the bond market following the encouraging economic report. One 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 would push inflation higher. But good news for the economy is once again good news for Wall Street, particularly after a report showed U.S. employers pulled back on their hiring last month by much more than expected.
That dud of a jobs report raised worries the U.S. economy could buckle under the weight of high interest rates brought by the Federal Reserve, and it contributed to turmoil in stock markets worldwide. But Thursday’s reports hint a perfect landing may still be possible, one where the Fed slows the economy’s growth by just enough through high rates 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.
Inflation has also been improving since it topped 9% two summers ago, punctuated by reports earlier this week on prices at both the consumer and wholesale levels. That has cleared the way for the Federal Reserve to soon deliver the cuts to interest rates that Wall Street loves.
Walmart added to the optimism after it delivered a bigger profit for the spring than analysts expected, and its shares climbed 6.6% The retail giant also raised its forecast for sales for the full year, indicating U.S. shoppers can keep spending. Such spending by U.S. consumers makes up the bulk of the economy.
It was just one of several big companies to join the parade of businesses topping analysts’ expectations for springtime profit.
Deere & Co. rode 6.3% higher after the seller of backhoes, dozers and other equipment reported higher profit and revenue than expected. That was despite what it called challenging conditions across the agricultural and construction sectors globally.
Cisco Systems’ profit and revenue for the latest quarter squeaked past analysts’ forecasts, and its stock jumped 6.8% after the maker of networking equipment also said it would eliminate thousands of jobs as it shifts to faster-growing areas of technology like artificial intelligence.
Ulta Beauty’s stock rose 11.2% to help lead the market after Warren Buffett’s Berkshire Hathaway revealed it has built an ownership stake in the retailer.
All told, the S&P 500 rose 88.01 points to 5,543.22. The Dow gained 554.67 to 40,563.06, and the Nasdaq composite rallied 401.89 to 17,594.50.
In the bond market, the 10-year Treasury yield clambered up to 3.91% from 3.84% late Wednesday 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% late Wednesday.
Traders still widely expect the Federal Reserve to cut its main interest rate 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, according to data from CME Group.
A week ago, many traders were forecasting a more severe cut of half of a percentage point because of worries at the time that the U.S. economy’s growth was sliding.
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.
The signals of a resilient U.S. economy helped drive smaller stocks in particular on Thursday. Smaller companies can be more beholden to the strength of the U.S. economy than huge multinationals, and the Russell 2000 index of smaller stocks rose 2.5% to help lead the market.
Smaller stocks have been even jumpier than the rest of the market, rising more than the S&P 500 when data indicate the U.S. economy is doing well and interest rates are about to come down, but tumbling more sharply when pessimism rises.
In stock markets abroad, indexes also rose in much of Asia and Europe.
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.
AP Business Writer Yuri Kageyama contributed.
The New York Stock Exchange, at right, is shown on Wednesday, Aug. 14, 2024, in New York. (AP Photo/Peter Morgan)
FILE - A person walks under the intense sun in front of Tokyo Stock Exchange building in Tokyo, on June 24, 2024. (AP Photo/Eugene Hoshiko, File)
FILE - A person walks past at an electronic stock board showing Japan's stock prices at a securities firm in Tokyo, June 27, 2024. (AP Photo/Shuji Kajiyama, File)
Israeli strikes on Palestinian territories have killed more than two-dozen Palestinians on Wednesday, according to local officials. They say an Israeli airstrike killed five Palestinians in the occupied West Bank, and at least 20 people, including 16 women and children, were killed in the Gaza Strip.
Gaza’s Health Ministry says Tuesday's strike on a tent camp in an Israeli-designated humanitarian zone killed at least 19 people.
The Health Ministry says over 40,000 Palestinians have been killed in Gaza since the Israel-Hamas war began. It does not differentiate between fighters and civilians in its count. The war has caused vast destruction and displaced around 90% of Gaza’s population of 2.3 million, often multiple times.
Hamas-led militants killed some 1,200 people, mostly civilians, in their Oct. 7 attack that sparked the war. They abducted another 250 and are still holding around 100. Around a third of them are believed to be dead.
Here's the latest:
TEL AVIV, Israel — The Israeli military says two Israeli soldiers died and seven were injured when their helicopter crashed in the southern Gaza Strip.
The military said Wednesday that the overnight helicopter crash was not the result of enemy fire and is under investigation. The helicopter was on a mission to evacuate wounded soldiers from Gaza for treatment in Israeli hospitals.
There have been 340 Israeli soldiers killed since the ground operation began in Gaza in late October, at least 50 of whom have been killed in accidents within Gaza — not as a result of combat with Palestinian militants, according to the military.
JERUSALEM — An Israeli official says dozens of Palestinian patients were expected to leave the Gaza Strip on Wednesday by way of an Israeli crossing, in order to travel to the United Arab Emirates for medical care.
The official says over 200 people, mostly children, are expected to leave, along with relatives to accompany them. It is the biggest exit of medical patients through Israel since the war erupted nearly a year ago.
Gaza has been completely sealed off since May, when Israeli forces captured the Gaza side of the border with Egypt, including the Rafah crossing between Egypt and the coastal strip, leading to its closure. Rafah had been the only entry or exit point for Palestinians, including medical patients, since the start of the war.
Since then, Israel has only allowed a small number of children and accompanying relatives to leave for medical treatment.
Israel’s military offensive, launched in response to Hamas’ Oct. 7 attack, has gutted Gaza’s already fragile health system. With few exceptions, Israel has barred Gaza’s Palestinians from entering Israel throughout the war.
The official says the patients are leaving through the Kerem Shalom crossing and heading to the Ramon airport in southern Israel, where they will board a flight to the UAE.
The official spoke on condition of anonymity pending a formal announcement by Israeli authorities.
— By Josef Federman in Jerusalem;
DEIR AL-BALAH, Gaza Strip — Hamas released the first public statement from Yahya Sinwar since he was appointed its overall leader in August.
In the written statement late Tuesday, Sinwar congratulated Algeria’s President Abdelmadjid Tebboune on his reelection and thanked the country for its support for the Palestinian cause. Algeria, the Arab representative on the United Nations Security Council, circulated a draft resolution in May demanding an immediate cease-fire in Gaza and a halt to Israel’s military operation in the southern city of Rafah.
A hard-liner within Hamas, Sinwar would have to approve any potential agreement for a cease-fire and hostage release. The United States, Qatar and Egypt have spent most of the year trying to broker such a deal but the negotiations have repeatedly stalled.
Sinwar was one of the architects of the Oct. 7 attack into Israel that ignited the war in Gaza. He has not been seen since the start of the war and is believed to be alive and hiding inside the territory. Israel has vowed to kill him.
RAMALLAH, West Bank — An Israeli airstrike has killed five Palestinians in the occupied West Bank, Palestinian officials say.
The Israeli military said it targeted a group of militants in the northern city of Tubas early Wednesday.
The Palestinian Health Ministry in the West Bank confirmed the toll but does not say whether those killed by Israeli fire are militants or civilians.
Israel has stepped up its military raids across the territory in recent weeks and says it is working to dismantle militant groups and prevent attacks. Palestinians say such operations are aimed at cementing Israel’s seemingly open-ended military rule over the territory.
Israel captured the West Bank, along with east Jerusalem and the Gaza Strip, in the 1967 Mideast war. The Palestinians want all three territories for their future state. The West Bank has seen a surge in violence since Hamas’ Oct. 7 attack out of Gaza ignited the war there.
DEIR AL-BALAH, Gaza Strip — Palestinian officials say Israeli airstrikes in the Gaza Strip have killed at least 20 people, including 16 women and children.
An airstrike early Wednesday killed 11 people, including six siblings ranging from 21 months to 21 years old, according to the European Hospital, which received the casualties. The dead from the strike near the southern city of Khan Younis included three other women, a child and a man, according to the hospital.
A strike late Tuesday on a home in the urban Jabaliya refugee camp in northern Gaza killed nine people, including six women and children, according to the Gaza Health Ministry and the Civil Defense first responders. The Civil Defense says the home belonged to Akram al-Najjar, a professor at the al-Quds Open University, who survived the strike.
Israel says it only targets militants, claiming 17,000 militant deaths without providing evidence. It blames civilian deaths on Hamas because its fighters are embedded in dense residential neighborhoods. The military rarely comments on individual strikes, which often kill women and children.
The Health Ministry says Israel’s offensive, launched in response to Hamas’ Oct. 7 attack, has killed at least 41,020 Palestinians in Gaza and wounded nearly 95,000. It does not distinguish between fighters and civilians but says more than half of those killed were women and children.
Hamas-led militants killed some 1,200 people, mostly civilians, on Oct. 7 and abducted around 250. Around 100 hostages are still held in Gaza, about a third of whom are believed to be dead.
Blindfolded and bounded protesters take part in a protest against Israeli Prime Minister Benjamin Netanyahu's government and call for the release of hostages held in the Gaza Strip by the Hamas militant group in Tel Aviv, Israel, Tuesday, Sept. 10, 2024. (AP Photo/Ohad Zwigenberg)
This undated photo released by the Israel Defense Forces shows the Gaza tunnel where it says six Israeli hostages were recently killed by Hamas militants. (Israeli Army via AP)
Mourners pray over the covered bodies of Palestinians who were killed in an Israeli airstrike on a crowded tent camp housing Palestinians displaced by the war in the Muwasi, outside the hospital morgue in Deir al-Balah, Gaza Strip, Tuesday, Sept. 10, 2024. (AP Photo/Abdel Kareem Hana)
Palestinians look at the destruction after an Israeli airstrike on a crowded tent camp housing Palestinians displaced by the war in Muwasi, Gaza Strip, Tuesday, Sept. 10, 2024. An Israeli strike killed at least 40 people and wounded 60 others early Tuesday, Palestinian officials said. Israel said it targeted "significant" Hamas militants, allegations denied by the militant group. (AP Photo/Abdel Kareem Hana)
Palestinians look at the destruction after an Israeli airstrike on a crowded tent camp housing Palestinians displaced by the war in Muwasi, Gaza Strip, Tuesday, Sept. 10, 2024. An Israeli strike killed at least 40 people and wounded 60 others early Tuesday, Palestinian officials said. Israel said it targeted "significant" Hamas militants, allegations denied by the militant group. (AP Photo/Abdel Kareem Hana)
Mourners carry the covered bodies of Palestinians who were killed in an Israeli airstrike on a crowded tent camp housing Palestinians displaced by the war in the Muwasi, outside the hospital morgue in Deir al-Balah, Gaza Strip, Tuesday, Sept. 10, 2024. (AP Photo/Abdel Kareem Hana)
