U.S. retail sales bounced back sharply in June, signaling renewed economic momentum and giving the Federal Reserve more reason to hold off on rate cuts as it weighs the inflationary impact of import tariffs.
Another pointer for the consumer health, PepsiCo forecast upbeat results, fueled by demand for energy drinks and healthier sodas, helping it offset concerns about a dip in annual core profit. The company’s shares jumped 6.8%.
Investors have already weathered a whirlwind of mixed economic signals this week – producer prices stalled in June, while a spike in consumer inflation dashed hopes for aggressive Fed easing.
Traders now peg the odds of a September rate cut at just over 54%, with a July move nearly ruled out, according to CME’s FedWatch tool.
“The Fed is going to be more cautious and data-driven than what the market wants them to do,” said Jason Barsema, president of Halo Investing.Echoing this cautious stance, Fed Governor Adriana Kugler warned that rate cuts are on hold for now, as Trump-era tariffs begin to push up consumer prices and tight policy remains key to keeping inflation expectations in check.U.S. Treasury yields also edged lower following the retail sales data.
At 11:26 a.m. ET, the Dow Jones Industrial Average rose 120.53 points, or 0.27%, to 44,375.31, the S&P 500 gained 23.93 points, or 0.38%, to 6,287.63 and the Nasdaq Composite gained 144.32 points, or 0.70%, to 20,874.81.
“Today is a day of somewhat justification of consumer health and earnings that continue to impress in a way that offer relief to markets,” said Keith Buchanan, senior portfolio manager at Globalt Investments.
United Airlines gained 3.4% after the carrier projected stronger demand since early July, offering a rare bright spot for an industry strained by Trump’s budget cuts and trade tensions.
Rivals Delta and American Airlines also climbed over 1% each.
U.S. chipmakers edged up after TSMC, the world’s main producer of advanced AI chips, posted a record quarterly profit, saying demand for artificial intelligence was getting stronger.
U.S.-listed shares of TSMC gained 3.7%, Marvell rose 2% and Nvidia added 1%.
The technology sector was leading the pack among sectors, with 1% gain.
Wall Street also watched Netflix ahead of its quarterly results after the market’s close. Its shares were up 0.6%.
Markets whipsawed on Wednesday after reports suggested Trump was mulling over the ouster of Fed Chair Jerome Powell. Though Trump quickly shot down the reports, his persistent criticism of the central bank – and hints at a possible ouster – kept investors jittery over the Fed’s independence.
Meanwhile, attention also remained on looming tariffs, with an August 1 deadline threatening higher levies for many U.S. trading partners.
Trump told Real America’s Voice on Wednesday that the U.S. is closing in on a deal with India and may soon reach an agreement with Europe as well.
Advancing issues outnumbered decliners by a 1.9-to-1 ratio on the NYSE and by a 2.56-to-1 ratio on the Nasdaq.
The S&P 500 posted 25 new 52-week highs and four new lows, while the Nasdaq Composite recorded 78 new highs and 23 new lows.
