Despite a poor retail sales data that sparked concerns about a “soft landing” for the US economy, stocks surged on Thursday, with the S&P 500 (^GSPC) reaching a new record high.
The Dow Jones Industrial Average (^DJI) increased by 0.9%, or over 350 points, while the tech-heavy Nasdaq Composite (^IXIC) gained 0.3%. The S&P 500 rose roughly 0.6% to a record closing high of 5,029.73.
Stocks have reversed an early-week meltdown, recouping all of the sharp losses suffered Tuesday after a strong inflation report dashed expectations for interest rate reduction. Comments from Federal Reserve policymakers downplaying the statistics helped calm anxieties.
However, investors are still unsure if the sell-off was a one-time event caused by seasonal weakness, or the beginning of a larger retreat. Many Wall Street experts have noted that there were hints of resiliency even as equities fell.
Despite a poor retail sales data that sparked concerns about a “soft landing” for the US economy, stocks surged on Thursday, with the S&P 500 (^GSPC) reaching a new record high.
The Dow Jones Industrial Average (^DJI) increased by 0.9%, or over 350 points, while the tech-heavy Nasdaq Composite (^IXIC) gained 0.3%. The S&P 500 rose roughly 0.6% to a record closing high of 5,029.73.
Energy (XLE) and Real Estate (XLRE) were the main winners on Thursday, with both up more than 2%.
Stocks suffered one of their worst days of 2024 on Tuesday, as investors processed a higher-than-expected inflation reading. Two trading sessions after the sell-off, the S&P 500 (^GSPC) has already exceeded its closing level on Monday, right before the inflation print.
This comes as many on Wall Street have highlighted that the inflation figure may give investors pause. However, it is unlikely to undermine the overarching narrative that the US economy is headed for a gentle landing.
Earnings season is almost over, and it’s time for senior executives to hit the speaking circuit.
Today’s examples include key players at lift giant Otis Worldwide (OTIS) and Restaurant Brands International (QSR).
Otis had an investor day at the NYSE this morning, which lasted until noon, and unveiled a pretty positive presentation ahead of the event. What stuck out to me was Otis’ forecast of 10% adjusted EPS growth over the medium term. This will be aided in part by a $8 billion return to shareholders in the form of dividends and buybacks through 2028.
Two things become evident after reading the 63-page PowerPoint deck: Otis is generating a lot of money by modernising and maintaining outdated lifts and escalators. And who claimed this firm wasn’t a recurrent revenue generator?
Around 4:20 p.m. ET, I go live with Otis CEO Judy Marks at the NYSE on Yahoo Finance Live. Tune in if you’ve already gotten off the work lift.
But first, I’m live with Restaurant Brands CEO Josh Kobza and executive chairman Patrick Doyle (who saved Domino’s Pizza). I saw in the company’s results earlier this week that a turnaround is underway at Burger King US. As a result, I want to engage them both in conversation about that issue.
The January retail sales figure was worse than predicted on Thursday. Retail sales declined 0.8% in January from the previous month, according to Census Bureau statistics. Economists predicted a 0.2% drop. The control group in the retail sales data, which many economists use to estimate GDP, fell 0.4%.
In addition, the publication reduced retail sales for the past two months lower. Overall, the report lowered forecasts for first-quarter GDP growth.
The Atlanta Fed now expects the economy to grow at a 2.9% annualised rate, down from the 3.4% projected on February 8.
Wall Street economists also reduced their estimates. Goldman Sachs reduced its first-quarter GDP forecast from 2.8% to 2.5% following the news. Meanwhile, Bank of America now expects 0.8% annualised growth in the first quarter, down from its previous prediction of 1%.
However, Bank of America US economist Aditya Bhave notes that the lower GDP growth prediction may alleviate fears that the economy is running too hot for inflation to continue its downward trend.
“After the blowout January jobs report and the large beat in CPI inflation, there were growing concerns that the economy was overheating,” Bhave said in a note to clients on Thursday. “The January retail sales data, along with the revisions, goes a long way towards reducing those concerns.”
Bret Taylor, former Salesforce (CRM) co-CEO and current OpenAI chairman, has departed stealth mode with his new unicorn AI business Sierra. He founded it this week alongside his longtime Google colleague Clay Bavor.
The Silicon Valley wunderkinds (now mature IT workers in their forties) informed me on Yahoo Finance Live moments ago that the new technology is similar to a customer care bot on steroids. Already, clients include Sonos (SONO), WeightWatchers (WW), and others.
Naturally, when you get the opportunity to speak with the chair of OpenAI, you must inquire about OpenAI and humanity’s destiny in the face of AI. Heavy things, limited time, but you must ask.