Market Averages Rebounded After Resilient Consumer Spending Data

Barry Adams
14 Sep, 2023
New York City

Market indexes on Wall Street rebounded after weak trading for three days in a row and investors reviewed retail sales and wholesale inflation data. 

Investors have been divided over the future direction and terminal level of interest rate as economy keeps sending mixed signals. 

Despite elevated prices and borrowing costs, consumer spending is resilient and housing market continues to report transactions levels that are above Covid-19 levels. 

The Federal Reserve is expected pause rate hike after it policy meeting next week, but the European Central Bank lifted its policy rates to record levels after hiking rates by 25 basis points. 

However, the ECB noted that inflation is easing and policymakers may be ready to pause rates after lifting rates for ten times in a row. 

 

Retail Sales Inched Higher In August 

Retail sales increased 0.6% from the previous month in August, faster increase than the downwardly revised 0.5% rise in July.  

Retail sales are adjusted for seasonal factors but not for prices. 

Despite higher prices and rising costs, consumer spending continue to rise supported by higher wages. 

Sales at gasoline stations increased 6.2% after gasoline prices rose 10%. 

Retail sales excluding fuel, food services, automobiles and building materials, increased 0.1% in August. 

On a yearly basis, retail sales to 2.47% in August, slower than 2.67% in the previous month. 

 

Producer Prices Index Accelerated In August 

Producer price index in August rose 0.7% from the previous month, faster than 0.4% in July, the U.S. Bureau of Labor Statistics reported Thursday. 

Goods prices increased 2%, driven by a 10.5% rise in energy costs and prices for services edged up 0.2%, largely because of rising transportation and warehousing costs by 1.4%.

Core wholesale inflation, which excludes energy and food, rose 0.2%, following a rise of 0.4% in July. 

From a year ago, producer price index increased a four-month high of 1.6% and core index rose 2.2%, the weakest level since January 2021.  

 

U.S. Indexes & Yields 

The S&P 500 index inched up 0.4% to 4,483.21 and the Nasdaq Composite added 0.2% to 13,834.97. 

The yield on 2-year Treasury notes hovered near 5.01%, 10-year Treasury notes inched slightly higher to 4.28% and 30-year Treasury bonds edged up to 4.38%. 

Crude oil increased $1.13 to $89.65 a barrel and natural gas prices increased 10 cents to $2.78 a thermal unit. 

The dollar index edged higher to  105.22, the level last seen in March but higher than the low of 99.85 on July 13. 

Last week, the dollar index, which tracks the price of the U.S. dollar against major currencies, halted a five-day rally Friday but extended gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates. 

 

U.S. Stock Movers 

AMC Entertainment Holdings Inc gained 3.3% to $8.52 after the company said it completed said it completed secondary stock offering announced few weeks ago. 

AMC raised $325.5 million through the sale of 40 million shares at an average price of $8.14. 

Yum China Holdings Inc 5.2% to $56.0 after the company forecasted 20,000 restaurants in China by 2026 at a gathering of investors. 

Semtech Corp jumped 4.6% to $23.90 after the company reported better-than-expected quarterly results and current quarter forecast. 

The company estimated fiscal third quarter revenue in the range between $190 million and $210 million and loss per share between 9 cents and 22 cents. 

Energy stocks traded higher after crude oil traded at a 2023 high on supply worries after Saudi Arabia and Russia announced to extend voluntary production cuts till the end of 2023. 

West Texas Intermediate crude oil price jumped to $89.98 and Brent crude advanced to $93.27 a barrel. 

Chevron, ExxonMobil, Murphy Oil, Occidental Petroleum rose between 1% and 2%. 

Delta Air Lines, Inc decreased 0.8% to $39.22 after the company joined other airlines and lowered its profit estimate citing higher operating and fuel costs. 

The airline said third quarter adjusted earnings per share to fall between $1.86 and $2.05 compared to the previous estimate between $2.20 and $2.50. 

The airline however raised its revenue growth estimate to be closer to its upper end of the range between 11% and 14%, because of the strong demand for transatlantic travel. 

The company also reiterated its full-year adjusted earnings per share to fall between $6 and $7.