Wall Street was heading for a strong open on Tuesday as investors cashed in another batch of profits from retailers that could reveal the impact of lingering inflation on consumer spending.
S&P 500 futures jumped 1.5%, while Dow Jones industrials rose 1.1%, despite growing doubts about the U.S. economic outlook that weighed on markets for six weeks.
The Commerce Department reported on Tuesday that retail sales in April rose 0.9%, a solid increase that underscores Americans’ ability to continue to increase spending even as inflation persists at an all-time high. for nearly 40 years.
Investors are also watching comments from Federal Reserve officials that could provide insight into the U.S. economic outlook and future policy decisions.
Signs of progress in China’s efforts to bring the coronavirus outbreaks under control appear to be outweighing concerns over weaker-than-expected US and Chinese economic data.
“Markets remain in fight-or-flight mode while rolling the dice on the chances of a recession,” Stephen Innes of SPI Asset Management said in a report. He added that “traders seem to be in the mood to stay bearish until proven otherwise. However, there is still a lingering tone of risk despite the horrific Chinese data.
In Europe, the German DAX gained 1.5% at midday and the CAC 40 in Paris gained 1.3%. Britain’s FTSE 100 gained 0.8%.
The gains followed a strong performance in Asia, where Hong Kong’s Hang Seng jumped 3.2% to 20,590.99.
In Tokyo, the Nikkei 225 climbed 0.4% to 26,659.75. The South Korean Kospi rose 0.9% to 2,620.44.
Australia’s S&P/ASX 200 gained 0.3% to 7,115.50 while the Shanghai Composite Index rose 0.7% to 3,093.70.
Markets are trying to gauge how businesses and consumers are handling rising prices and whether central banks can help alleviate the problem. On Wall Street, the major indices have been sliding since early April.
Home Depot shares jumped 3% before the market opened after the retailer said sales rose about 4%, pushing earnings to $4.09 per share for the quarter. That beat Wall Street projections and the company raised its earnings and sales forecasts as homeowners continued to pump money into their homes, albeit at a slightly slower pace.
Walmart, on the other hand, said on Tuesday that its profits were hit even as first-quarter sales rose. The company said it was grappling with rising food and fuel inflation and higher costs from a struggling global supply chain. Walmart tends to be more cautious about raising its prices as its budget-conscious customer base is hit by higher prices, especially for food and gas.
The Arkansas-based retailer also cut its full-year earnings forecast on Tuesday, sending its shares tumbling more than 6% before the opening bell.
The Federal Reserve is gradually pushing its benchmark short-term interest rate from its all-time high near zero, where it has spent most of the pandemic. He also said he may continue to raise rates to double the usual amount at future meetings. Investors fear that the central bank could cause a recession if it raises rates too high or too quickly.
Ongoing supply chain issues continue to fuel inflation, and China’s recent COVID-19 lockdowns have raised fears they could worsen. Russia’s war against Ukraine has made already high energy prices even more volatile, which could also lead to higher inflation.
US crude oil prices rose 3.4% on Monday and are up more than 50% for the year. Natural gas prices rose 3.8% and more than doubled in 2022.
On Tuesday, benchmark U.S. crude oil rose $1.20 to $115.40 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the pricing basis for international trade, took $1.32 to $115.56 a barrel.
In currency trading, the dollar rose to 129.35 Japanese yen from 129.11 yen Monday night. The euro was at $1.0540, down from $1.0436.
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