US stocks rose on Thursday as investors weighed encouraging results for retailer Macy’s, indicating consumer demand is holding up against disappointing data on America’s economic output.
At the open, the S&P 500 advanced 1.2 per cent, while the tech-heavy Nasdaq 100 advanced 1.3 per cent, shrugging off disappointing overnight earnings from Nvidia. The regional Stoxx Europe 600 index rose 0.6 per cent, while the FTSE 100 and Germany’s Dax index were up 0.4 and 1.3 per cent respectively.
Markets have been choppy in recent weeks as traders prepare for global central banks, led by the US Federal Reserve, to tighten monetary policy in an attempt to cool inflation even as concerns increase that global growth is faltering.
After a difficult few weeks for US consumer companies, including profit warnings for retailers Target and Walmart, a strong performance by department store Macy’s offered a counterpoint to indications of a demand slowdown. Shares in the retailer rose 14 per cent after it raised its 2022 profit forecast.
“I don’t think you can say the bottom is imminent,” said Tim Graf, global head of macro strategy at State Street Global Markets. “But we have probably seen the most volatile period of drawdowns.”
Investors also digested a mixed batch of US economic data on. Revised figures showed the world’s biggest economy contracted at an annualised rate of 1.5 per cent in the first quarter, slightly worse than the previous estimate of 1.4 per cent.
The decline came as the US trade deficit widened, government spending declined and commercial inventory investment dipped, according to a report from the commerce department. However, consumption, a key component of US GDP, continued rising.
Meanwhile, first-time claims for unemployment benefits fell last week to 210,000, better than the consensus of 215,000 by economists polled by Refinitiv.
“The market is paying more attention to economic data. A few weeks ago it was all about inflation, not so much about other macro data. Now everything that could affect growth is important, especially all that’s related to consumption,” said Anne Beaudu, a global fixed income portfolio manager at Amundi.
The reports follow the publication late on Wednesday of minutes from the most recent meeting of the US central bank showing it was prepared to swiftly raise rates over coming months.
“No doubt [Federal Reserve Committee] members are well aware of the risk of a recession caused by yanking up interest rates,” said Antje Praefcke, senior currency analyst at Commerzbank. “However, as inflation was at the forefront of everyone’s minds in early May, it should not have come as a surprise that the minutes do not reflect any thoughts of a recession or hard landing.”
In Asia, Hong Kong’s Hang Seng index closed down 0.3 per cent and Japan’s Topix index was flat.
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