Wall Street continued its recovery from a seven-week losing streak on Thursday as investors seized on apparent signs that the worst of sky-high inflation could also be over.
The Dow Jones Industrial Average rose 565 points, or 1.6%, to 32,647 and the Nasdaq rose 2.8% as of 1:30 p.m. Eastern local time.
The S&P 500, which is coming off seven straight weekly losses, its longest such stretch since 2001, was up 2.1%.
The market was galvanized by a powerful set of quarterly results from Macy’s and other retailers.
Smaller company stocks also made strong gains, an indication of bullishness on the economy. The Russell 2000 index rose 2.5%.
Retailers led the broader market higher.
Macy’s surged 17.1% after it raised its profit forecast for the 12 months following a powerful first-quarter financial report.
Dollar General surged 13.1% and Dollar Tree jumped 20.5% after the discount retailers reported solid earnings and gave investors encouraging forecasts.
Strong earnings from retailers like Macy’s ignited Thursday’s gains.REUTERS
The retail sector is being closely watched by investors searching for more details on just how much pain inflation is inflicting on firms and consumers.
Weak reports from the several big firms last week, including Goal and Walmart, spooked an already volatile market.
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Earlier on Thursday, the federal government released data indicating that the US economy shrank in the primary three months of the 12 months though consumers and businesses kept spending at a solid pace.
The Commerce Department estimated that the economy contracted at a 1.5% annual pace from January through March, a slight downward revision from its first estimate of 1.4%, which it issued last month.
It was the primary drop in GDP for the reason that second quarter of 2020 — within the depths of the COVID-19 recession — and followed a sturdy 6.9% expansion in the ultimate three months of 2021.
The nation stays stuck within the painful grip of high inflation, which has caused particularly severe hardships for lower-income households, lots of them people of color.
However the nonpartisan Congressional Budget Office released a report on Wednesday indicating that it expects the gross domestic product to grow 3.1% in 2022.
The CBO report also predicted that soaring levels of inflation will cool every month to around 2% by some point in 2024.
“In CBO’s projections, the present economic expansion continues, and economic output grows rapidly over the subsequent 12 months,” the CBO said in its report.
“To meet the elevated demand for goods and services, businesses increase each investment and hiring, although supply disruptions hinder that growth in 2022.
With Post wires