In a notable midday trading session on Thursday, U.S. equity indexes experienced a significant uptick, buoyed by a rise in government bond yields as retail sales data surpassed analysts' expectations. The Nasdaq Composite soared by 2%, reaching 17,543.1, while the S&P 500 rose by 1.4% to 5,530.6, and the Dow Jones Industrial Average advanced by 1.2%, closing at 40,484.3.
Most sectors enjoyed gains during the trading session, with the exceptions being real estate and utilities. The consumer discretionary and technology sectors led the charge, reflecting increased investor confidence. The latest data from the Census Bureau indicated that U.S. retail sales grew more than anticipated in July, largely supported by increased expenditure in the automotive and electronics sectors.
Sales surged by 1% in July, recovering from a downwardly revised 0.2% decline in June. Analysts had forecasted a more modest increase of 0.4%, but the actual results showcased an annual rise of 2.7% in retail sales for July. TD Economist Shernette McLeod commented on the surprising rebound, stating in a note, "The rebound suggests that despite mounting pressures on consumers' balance sheets, as savings dwindle and wage growth slows, the U.S.
consumer is not out yet. That said, consumer spending is still expected to slow as 2024 draws to a close." In financial markets, Treasury yields also saw a noteworthy rise, with the 10-year Treasury yield climbing 11.4 basis points to reach 3.94%. Simultaneously, the two-year rate skyrocketed by 15.6 basis points to 4.1%, signaling growing optimism among investors that the economy is not heading towards a hard landing. Commodity markets likewise experienced shifts, as West Texas Intermediate crude oil prices jumped by 1.6%, reaching $78.22 per barrel.
In the realm of corporate news, shares of Ulta Beauty ($ULTA) saw an impressive intraday rise of 12%, marking it as the top performer on the S&P 500, following revelations that Berkshire Hathaway (BRK.A, BRK.B) had acquired a stake in the beauty retailer. In another significant movement, Cisco Systems ($CSCO) witnessed its shares increase by 7%, positioning it among the leading gainers on the S&P 500, Nasdaq, and Dow after the company reported a fiscal Q4 performance that showed a slower-than-expected decline in non-GAAP earnings and sales.
Additionally, Cisco announced a restructuring program aimed at enhancing its operational efficiencies. Overall, Thursday’s trading session highlighted a complex interaction between consumer behavior, corporate developments, and macroeconomic factors influencing the U.S. equity markets..