NEW YORK – World stock indexes mostly stayed higher and the U.S. dollar held on to gains on Tuesday after solid U.S. retail sales data signaled resilience in the economy.
Data showed retail sales unchanged in June from a May reading that was higher than initially estimated.
Signs of a strengthening economy might weaken the case for the Federal Reserve to cut interest rates, but this indicator did not change the outlook for investors, who are fully pricing in a rate cut of at least 25 basis points (bps) by the Fed at its September meeting, according to CME’s FedWatch Tool.
“Something we had been watching the last couple of months is the softening in retail sales,” said Dustin Thackeray, chief investment officer at Crewe Advisors in Salt Lake City.
Tuesday’s numbers suggest consumers are still spending, he said, “so the market saw that as a favorable data point”.
MSCI’s gauge of stocks across the globe rose 1.09 points, or 0.13%, to 829.82.
Fed Chair Jerome Powell said on Monday that recent inflation data bolstered policymakers’ confidence that price pressures are on a sustainable path lower.
Investors kept pondering the implications of a possible Donald Trump victory in the upcoming U.S. presidential election following the attempted assassination of Trump on Saturday.
The Republican former president has indicated support for policies traditionally seen as friendly to domestic businesses, such as loosening regulation, increasing tariffs on some imports, and cutting taxes.
The Dow Jones Industrial Average rose 677.91 points, or 1.68%, to 40,889.63, the S&P 500 gained 29.63 points, or 0.53%, to 5,660.85 and the Nasdaq Composite gained 16.93 points, or 0.09%, to 18,489.58.
“Obviously the market liked the boost in his ratings and the potential for a Trump presidency… we know what we’re getting with Trump,” Thackeray said.
Boosting the Dow and S&P 500 was UnitedHealth Group (NYSE: UNH), which gained more than 6% after strong results.
In Europe, the STOXX 600 fell 0.28%.
A CLOSE RACE
Opinion polls show a close race between Trump and President Joe Biden, though Trump leads in several states that are likely to decide the November election.
Trump’s nomination on Monday of his onetime critic, Ohio Sen. J.D. Vance, as his vice presidential running mate, also reverberated in financial markets.
“Vance is particularly tough on China, so that’s one of the reasons for the weakness in Chinese assets today,” said Colin Asher, economist at Mizuho.
Shares of Trump Media & Technology Group (NASDAQ: DJT) gave back some of the large gains racked up on Monday, trading down 8% on the day.
The dollar index, which measures the greenback against a basket of currencies, softened slightly but still showed a gain of 0.07% at 104.31, with the euro down 0.04% at $1.089. Against the Japanese yen, the dollar strengthened 0.28% to 158.45.
Investors are still closely watching the yen after Tokyo’s suspected intervention last week disrupted the popular carry trade.
Japanese officials also issued fresh warnings of possible measures.
Data on Tuesday showed the Bank of Japan likely intervened a second time on July 12 to the tune of 2.14 trillion yen ($13.50 billion) to support the currency, following some $22.43 billion spent on intervention the previous day.
The yield on benchmark U.S. 10-year notes fell further during the day, clocking up a 5.8-basis points slide to 4.171%, from 4.229% late on Monday.
U.S. crude futures fell $1.15 to settle at $80.76 a barrel.
(Source: Reuters)
