Wall Street experienced a strong rally overnight fueled by positive economic indicators that alleviated concerns of an impending recession. The Dow Jones Industrial Average surged by 1.39%, the S&P 500 registered a 1.61% increase for the sixth consecutive day, and the tech-heavy Nasdaq Composite saw a significant jump of 2.34%.
The unexpected 1% growth in U.S. retail sales in July, well above the Dow Jones estimate of 0.3%, provided a major boost. Additionally, there was a decline in weekly jobless claims, further contributing to the positive market sentiment.
Stephanie Roth, the chief economist at Wolfe Research, emphasized the significance of the robust retail sales and claims data in dispelling recession fears. She pointed out that while there has been a slowdown in economic momentum, there is no immediate threat of a recession looming over the U.S. economy.
According to CME’s FedWatch Tool, odds of a 50 bps interest rate cut in September has plummeted to less than 25%, compared to more than 35% on August 14 and 55% a week ago. In the meantime, the market is pricing in more than 75% for a 25 bps rate cut in September.
