On Thursday, robust gains were observed in US benchmark equity indexes and Treasury yields as the financial markets processed the latest waves of economic data alongside corporate earnings reports. The Nasdaq Composite showcased an impressive jump of 2.3%, closing at 17,594.5, whereas the S&P 500 experienced a 1.6% increase, reaching 5,543.2.
Meanwhile, the Dow Jones Industrial Average marked a rise of 1.4%, finishing at 40,563.1. Leading the sector gainers were consumer discretionary and technology stocks, whereas the real estate sector was the only outlier experiencing a decline. Utilities displayed minimal changes in performance. In terms of economic indicators, US retail sales for July exceeded projections, notably driven by a significant uptick in consumer spending targeted at cars and electronics, as reported by the Census Bureau.
This positive sentiment was complemented by official figures released on Wednesday showing a surprising slowdown in the pace of annual consumer inflation for the previous month. Consequently, this has bolstered expectations that the Federal Reserve may initiate measures to ease its monetary policy as early as September.
A note from TD to its clients elaborated on the current economic environment, stating, "With employment continuing to slow and inflation more well-behaved in recent reports, it would take a much larger jolt from retail sales to alter the calculus for a cut. As such, for the remainder of the year, we continue to expect three quarter-point rate cuts from the Fed." From the labor market perspective, weekly applications for unemployment insurance in the US unexpectedly declined; however, the four-week moving average for continuing claims lingered at its highest level since November 2021, as indicated by the Department of Labor.
Looking at the housing market, homebuilder confidence in the US remains at the lowest level since December 2023. Heightened interest rates and soaring home prices have negatively impacted sentiment in the sector, according to data from both the National Association of Home Builders and Wells Fargo. In the manufacturing sector, New York reported that manufacturing activity contracted less than was initially projected for August.
Conversely, the US Mid-Atlantic region surprised analysts with a negative reading, attributed to downturns in new orders and shipments based on two separate reports. As for Treasury yields, the US two-year yield surged 15.6 basis points to 4.10% on Thursday, while the 10-year yield advanced 9.9 basis points, achieving 3.92%.
In company-specific news, Cisco Systems ($CSCO) saw its shares soar by 6.8%, making it the top performer on the Dow. Late Wednesday, Cisco, a leading networking equipment maker, disclosed its fiscal fourth-quarter results, which, despite showing a year-over-year decline, surpassed Wall Street's estimates.
The company further revealed a restructuring plan that is expected to impact approximately 7% of its global workforce. Walmart ($WMT) was a close second on the Dow's gainers list, climbing 6.6%. This rise followed an announcement from the retail giant, which upgraded its full-year outlook to surpass initial expectations after reporting fiscal second-quarter results that exceeded market estimates across all its operational segments.
Deere ($DE) held steady on its guidance for total net income for the year, despite experiencing a year-on-year decline in fiscal third-quarter results. However, it still managed to surpass Street expectations, leading to a share price increase of 6.3%. Conversely, Fair Isaac ($FICO) experienced the steepest decline on the S&P 500, with shares falling 4.2%.
In commodity news, West Texas Intermediate crude oil sharped an increase of 1.3%, trading at $77.98 a barrel. Meanwhile, gold rose by 0.5% to $2,493.20 per troy ounce, and silver soared 3.9% to $28.41 per ounce..