On Thursday, Wall Street saw an uptick as unexpected dips in U.S. retail sales for January fueled anticipation of imminent Federal Reserve interest rate reductions.
The Commerce Department highlighted a 0.8% fall in retail sales, notably in auto dealerships and fuel stations.
This downturn provided some relief from the panic caused by higher-than-anticipated inflation reports earlier in the week, suggesting a potential economic slowdown.
“It looks like the economy could be softening, which paradoxically could be positive, hinting at a Fed lean towards rate reductions,” Thomas Martin from GLOBALT observed.
Rate cut expectations for May jumped to 40%, with June’s prospects soaring to around 79%, as per CME Group’s FedWatch.
Wall Street Gains as Drop in Retail Sales Signals Possible Rate Cuts
Additionally, the Labor Department’s latest figures showed a decrease in unemployment claims to 212,000 for the week ending February 10, below the forecasted 220,000.
Market indices reflected optimism: the Dow Jones surged 0.91% to 38,774.73, the S&P 500 grew 0.58% to 5,029.67, and the Nasdaq Composite nudged up 0.30% to 15,906.17.
Even lagging sectors like utilities, materials, and energy rebounded alongside a 2.3% rise in the Russell 2000 Index, showcasing a broad market recovery.