S&P 500 and Nasdaq Composite Traded Higher After Retail Sales Advanced

Barry Adams
17 Sep, 2024
New York City

Benchmark indexes on Wall Street advanced after retail sales were ahead of expectations. 

The S&P 500 index and the Nasdaq Composite gained 0.1% as investors reviewed the latest update on retail sales in August. 

Investors are anticipating the Federal Reserve to lower rates by at least 25 basis points, and many on Wall Street are hoping for the Fed to take a bold stance and cut rates by 50 basis points. 

Despite eleven rate increases over 2022 and 2023, prices are still rising faster than the Fed's 2% target rate. 

Moreover, inflation is seeping deeper into the economy, and service sector inflation is well above 3%. 

In addition, even though the pace of price increases has slowed from a year ago, prices are rising from a higher base, hitting the consumers who are living on relatively fixed income. 

The decline in overall inflation is largely driven by the fall in goods inflation and a decline in energy prices, and very little of this could be credited to the Fed's policy and measures. 

 

August Retail Sales Surpassed Market Expectations 

Retail and food services sales increased 0.1% from the previous month in August as consumers showed resilience despite growing anxieties about the economic slowdown. 

The sales data adjusted for seasonal and calendar effects but not for inflation. 

The monthly growth slowed sharply from the revised 1.1% increase in the previous month. 

On an annual basis, retail sales growth eased to 2.1%, a slowdown in growth for the third month in a row, the U.S. Commerce Department reported Tuesday.

Retail trade sales were up 0.1% from July and up 2.0% from last year, and nonstore retail sales were up 7.8%, while sales at food services and drinking places were up 2.7%, respectively. 

Sales at gasoline stores decreased 1.2% following the fall in gasoline prices, and electronics and appliance store sales eased 0.7%. 

Meanwhile, retail sales excluding food services, auto dealers, building materials stores, and gas stations, which are used to calculate GDP, were up 0.3%, following an upwardly revised 0.4% rise in July.

The Fed's lowering of inflation will only stoke inflationary forces in the months ahead, sending another ripple of higher prices.

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.5% to 5,657.95, the Nasdaq Composite rose 0.8% to 17,728.08, and the Russell 2000 index advanced 0.9% to 2,207.92. 

The yield on 2-year Treasury notes edged higher to 3.59%, 10-year Treasury notes inched down to 3.63%, and 30-year Treasury bonds inched lower to 4.0%.

WTI crude oil increased $0.15 to $70.25 a barrel, and natural gas prices edged up 3 cents to $2.41 a thermal unit.

Gold fell by $6.0 to $2,577.67 an ounce, and silver increased by $0.04 to $30.79.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 100.75.

 

U.S. Stock Movers

Microsoft Corp. jumped 2.2% to $440.71 after the software developer announced a $60 billion stock buyback plan and increased its dividend by 10.7% to 83 cents per share. 

Intel Corp. advanced 2.4% to $21.42, and the advanced chipmaker said it plans to create a new entity for its foundry business, allowing the unit to raise its own capital. 

Hewlett Packard Enterprise jumped 5.5% to $18.17 after Bank of America upgraded the stock to "buy" from "neutral," citing several catalysts for the company's server demand.