NEW YORK: Wall Street stocks shrugged off early weakness on Wednesday (Feb 15), finishing with gains after a surprisingly strong January retail sales report.
Sales bounced by 3% last month to US$697 billion (RM3.06 trillion) after two months of contraction, following strong gains in auto sales, department store sales and other categories.
Analysts had expected a rise of just 1.7%.
“The good news from retail, and broadly from the stronger economy, has been mostly priced in,” said Ross Mayfield, an investment strategist at Baird in Louisville, Kentucky. “At the same time, that strength has taken market expectations of rate cuts off the table and moved the terminal Fed funds rate a little bit higher.”
The report is the latest to suggest strength in the US economy – something that has sometimes rattled equity investors nervous over potential further Federal Reserve interest rate increases.
That dynamic has sometimes led to talk that “good news is bad news”.
“Markets seem to be changing their tune about ‘good news being good news’,” said Art Hogan an analyst at B. Riley Financial, who pointed to greater optimism that the US economy will avoid a sharp downturn, a so-called “hard landing”.
The S&P 500 climbed 0.28% to end the session at 4,147.61 points.
The Nasdaq gained 0.92% to 12,070.59 points, while Dow Jones Industrial Average rose 0.11% to 34,128.05 points.
Among individual companies, Airbnb surged 13.4% after reporting better-than-expected profits as it characterised travel demand as “strong”.
Apple, Alphabet, Amazon and Tesla rose between 1.4% and 2.4%, driving gains in the S&P 500 and Nasdaq. – AFP, Reuters