Stock market/ Wall Street/ U.S. economy/ retail sales/ Fed rate cuts/ Nvidia/ Treasury yields/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ U.S. stocks remained close to record levels on Thursday as economic reports showed strong retail sales and low jobless claims, boosting optimism for growth. Nvidia and Taiwan Semiconductor led gains in the S&P 500, while Treasury yields rose amid a positive economic outlook. Meanwhile, Travelers Insurance posted strong earnings, offsetting declines in CSX and Elevance Health.
Wall Street Nears Records as U.S. Economy Shows Strength – Quick Looks
- Market Movement: The S&P 500 and Dow Jones rose slightly, hovering around record highs.
- Chip Stocks Boosted: Nvidia and Taiwan Semiconductor stocks surged on strong quarterly results, driven by AI and smartphone demand.
- Economic Indicators: Positive retail sales data and low unemployment claims support economic optimism.
- Interest Rate Cuts: The Federal Reserve and European Central Bank are easing rates, aiming to sustain growth.
- Company Earnings: Travelers Insurance reported strong profits, while CSX and Elevance Health posted declines.
Deep Look
On Thursday, U.S. stock indices showed resilience, remaining close to record highs as economic indicators reflected strength across the board. The S&P 500 rose by 0.2% in early trading, nearing the peak it reached earlier in the week, while the Dow Jones Industrial Average increased by 85 points, reaching its own record set the previous day. The Nasdaq Composite also gained 0.3%, signaling investor confidence as key economic data helped support an optimistic outlook.
Leading the market gains were technology stocks, especially Nvidia and Taiwan Semiconductor Manufacturing Co. (TSMC). TSMC, a global leader in chip production, exceeded analysts’ expectations in its latest earnings report, citing high demand for smartphone chips and artificial intelligence technology. This news lifted U.S.-traded shares of TSMC by 8.2%, with Nvidia following closely behind with a 2% rise, marking a reversal from earlier losses prompted by a warning from Dutch chip equipment supplier ASML.
Investors received a further boost from the latest economic reports, which showed that U.S. retail sales in September outperformed expectations, reflecting consumer resilience despite financial pressures. According to Gary Schlossberg, a market strategist at Wells Fargo Investment Institute, the strong retail numbers are particularly noteworthy given financial strains among lower-income households and pre-election uncertainty. Additionally, unemployment claims dropped last week, indicating stable labor conditions and reinforcing confidence in the job market.
These encouraging data points are fueling optimism that the U.S. economy may avoid a recession despite inflation pressures, bolstered further by recent moves from the Federal Reserve to cut interest rates. With the Fed’s focus now shifting to support growth, lower interest rates provide a dual benefit: they ease economic constraints and lower borrowing costs for both businesses and consumers. Optimists hope this interest rate strategy will enable the economy to maintain momentum and keep stocks on an upward trajectory.
On a global scale, interest rates are falling in most regions. In Europe, the European Central Bank cut its main interest rate by a quarter of a point, spurring strong gains across European markets. The French and German indices surged by 1.7% and 1.1%, respectively, reversing the day’s earlier losses in Asian markets. Japan’s Nikkei 225 ended down 0.7%, while Hong Kong’s Hang Seng dropped 1%, reflecting the varied reactions in different economic regions.
Among individual stocks on Wall Street, Travelers Insurance posted a 6.2% increase in share price after reporting stronger-than-expected profit and revenue for the latest quarter. The company attributed its success to higher investment income, which offset increased losses from hurricanes and other severe weather events across several states. In contrast, shares of health insurer Elevance Health fell 15.9% after the company posted disappointing quarterly results and lowered its profit forecast for the year. Elevance pointed to a “timing mismatch” between Medicaid rates and rising claims as a primary factor in the downward revision. Meanwhile, railroad company CSX dropped 4.9%, citing lower-than-expected profits and modest growth projections as the Southeast recovers from recent hurricanes.
In the bond market, Treasury yields also edged higher following the economic reports. The yield on the 10-year Treasury increased to 4.07%, up from 4.02%, as investors adjusted their expectations for the economy’s strength. The two-year Treasury yield, more sensitive to Federal Reserve actions, also rose to 3.94%, reflecting market confidence in the Fed’s approach to fostering a balanced economic path.
These shifts underscore the steady economic growth that has kept Wall Street near record highs. With inflation stabilizing and interest rates easing, market analysts expect the economic environment to remain favorable, provided that consumer demand holds steady and corporate earnings align with projections. The U.S. stock market, buoyed by robust tech earnings, strong retail spending, and a stable job market, continues to signal optimism, setting a promising stage as year-end approaches.
