Wall Street Marches Ahead as Retail Sales Quell Slowdown Worries

WALL STREET - NEW YORK. Wall Street's main indexes rose about 1% on Thursday as retail sales data for July indicated resilient consumer spending, allaying fears of an imminent recession in the world's biggest economy.

All megacap and growth stocks edged up, with Tesla leading the pack, rising 4.1%.

Nine of the 11 major S&P 500 sectors were trading higher, with consumer discretionary and materials leading gains.

Retail sales increased 1.0% last month after a downwardly revised 0.2% drop in June, easing fears of a sharp economic slowdown that were fanned by a jump in the unemployment rate last week.

"The economy is not going into a recession imminently. This will take 50 basis points in September off the table. Still think that 25 basis points make sense just because inflation continues to ease," said Steve Wyett, chief investment strategist at BOK Financial.

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The yield of the two-year US2YT=RR and 10-year US10YT=RR Treasury notes rose after the data, with traders increasing the bets for a 25 basis points rate cut by the Federal Reserve to 75% versus 65% before the data. 

Meanwhile, retail bellwether Walmart added 7.5% after raising its annual profit forecast for the second time this year, as Americans kept flocking to its stores for inexpensive essentials.

Rival Target also jumped 4.8%, while Costco advanced 2%.

A separate reading also showed the number of Americans filing new applications for unemployment benefits unexpectedly fell last week.

Investors have kept a cautious eye on this week's data releases - the last set of economic indicators before Fed Chairman Jerome Powell delivers a much-anticipated speech at Jackson Hole next week.

Atlanta Fed President Raphael Bostic told the Financial Times that he is open to an interest rate cut in September, while St. Louis Fed chief Alberto Musalem stated that the time for the central bank to start easing monetary policy may be nearing.

The S&P 500 on Wednesday extended its winning streak to five sessions, boosted by softer inflation data, but the Nasdaq barely scraped into positive territory as Alphabet and some megacap stocks weighed.

At 9:35 a.m. ET, the Dow Jones Industrial Average rose 503.66 points, or 1.26%, to 40,512.05, the S&P 500 gained 56.25 points, or 1.03%, to 5,511.46 and the Nasdaq Composite gained 206.07 points, or 1.20%, to 17,398.67.

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Among other movers, Cisco Systems CSCO.O rose 9.4% after it forecast better-than-expected first-quarter revenue and said it was cutting 7% of its global workforce.

Nike NKE.N climbed 3.3% as billionaire investor William Ackman built new stakes in the sportswear company, while Ulta Beauty ULTA.O jumped 10.4% after Warren Buffett's Berkshire Hathaway BRKa.Nacquired a stake in the cosmetics store chain.

Deere & Co DE.N gained 5.8% after the farm, construction and forestry equipment maker beat analysts' expectations for third-quarter profit.

Advancing issues outnumbered decliners by a 4.76-to-1 ratio on the NYSE and by a 4.18-to-1 ratio on the Nasdaq.

The S&P 500 posted 21 new 52-week highs and one new low, while the Nasdaq Composite recorded 38 new highs and 30 new lows.