The mini ‘spring’ continues on the Wall – Dow closed with gains for the fifth consecutive session

For the second straight session, major Wall Street stocks traded higher, with retailers continuing to impress despite their brutal inflation, giving investors optimism after weeks of “bleeding” in the stock market.

In particular, the industrial index Dow Jones gained 1.61% or 516.91 points, to 32,637.19 points, the widest S&P 500 recorded an increase of 2% or 79.66 points, to 4,058.39 points, while the technological Nasdaq strengthened by 2.68% or by 350.91 points, to 11,740.65 points.

“Although it is an expected ‘oversold rally’, it suggests once again that last week ‘s echoes in the US consumer confidence slump, along with pessimistic headlines about an impending recession, were strongly exaggerated,” Quincy said. Krosby, senior executive at LPL Financial.

“Of course, this week’s macroeconomic data confirms that the economy is slowing, while the Fed appears determined to raise interest rates by 50 basis points over the next two months,” he added. “However, the belief that the American consumer, on whom 70% of the US economy is based, has been hit strategically is exaggerated, as corporate results and positive corporate guidance show,” he concludes.

The market has already shown some confidence since yesterday after the publication of the minutes of the May meeting of the Fed, in which the bank officials appeared determined to act drastically in order to tame the unbridled inflation.

As the minutes showed, the Fed officials confirmed their intention to raise interest rates by 50 bp. in the next two meetings, as expected, but left open the margin for further corresponding moves in the meetings that will follow if deemed necessary.

It is noted that the markets are currently pricing that the Fed will move to an interest rate around 2.5% -2.75% by the end of the year, something that many central bankers characterize as neutral. However, the statements in the minutes showed that the committee is ready to go beyond this level.

Thus, the indicators that moved cautiously upwards for most of yesterday’s session picked up rhythms after the minutes, finishing close to the highs of the day.

In any case, at this stage, the Dow Jones is running a negative series of 8 falling weeks, while the S&P 500 and Nasdaq have completed 7 falling five days.

And the worries about the course of the market remain. As 22V Research’s Dennis DeBusschere said in a note today, “the recent daily rallies have been followed by aggressive sales the next day, so it will be positive in the short term for international markets to hold up today.”

He also stressed that “investors anticipate that the tightening of financial conditions in the last 6 months is enough to significantly slow down economic growth. This is confirmed by the narrowing of the range of US financial data.”

As it became known today, the country’s GDP shrank by 1.5% in the period January – March, compared to the initial announcement of a fall of 1.4%.

In the individual figures, pre-tax corporate profits fell 2.3% from the previous quarter, although a year earlier they had risen 12.5%. According to Bloomberg, 2021 was the most profitable year for American companies since 1950, but now there is the first decline in corporate profits in the last five quarters.

On the other hand, of course, the news from the consumer spending front was positive, as the revised measurement showed an increase of 3.1% in the first quarter from 2.7% previously.

This is confirmed by the strong financial results announced daily by retailers, whose securities are rallying today with an extra boost from the upward revision of consumer spending.

Specifically, Macy’s rallied 16% after upgrading its outlook for the year and Williams-Sonoma followed at + 12% having outperformed market estimates for its quarter.

Similarly, discount retailers Dollar Tree and Dollar General jumped 21.7% and 14.2% respectively, after both also exceeded the estimates in the sizes announced today.

The frantic pace of retailers in the market is dragging even Nvidia, which strengthened by 5%, although today it issued a weaker-than-expected guidance for its second quarter.

Meanwhile, the Twitter title rose 4% after Elon Musk increased his stake in the offer he has made to buy the social media giant to $ 33.5 billion, indicating according to analysts the seriousness of his intentions. .

Microchip maker Broadcom has announced plans to buy cloud company VMware in a $ 61 billion deal that, if completed, would be one of the biggest tech deals of all time, with the former stock up 4% and of the second by 3%.

Of the 30 Dow shares, 27 traded positive and 3 traded negative. The profits were led by those of Boeing, Nike, Home Depotwhile those losses of Merck, Verizon, Johnson & Johnson.

The US labor market is unwaveringly strong

The U.S. job market, meanwhile, continues to confirm the strong period it is going through, as initial unemployment benefit applications fell at a rate that exceeded analysts’ estimates last week.

In particular, applications fell by 8,000 to 210,000, while the average estimates of analysts in a Bloomberg survey expected a smaller drop to 215,000.