The Nasdaq reaches a 9-month high after a series of optimistic economic data, optimism at the level of the debt ceiling

Joseph Adinolfi and Jamie Chisholm

US stocks rose Thursday as the Nasdaq Composite hit a new 9-month high as a series of mostly optimistic economic data overshadowed a call from a senior Federal Reserve policymaker for further rate hikes.

How shares are traded

The Dow Jones Industrial Average rose 409 points, or 1.2%, to 33,421 on Wednesday, which could help the blue chip average avoid a third straight weekly decline.

What drives the markets

US stocks opened mostly lower on Thursday as Walmart Inc. (WMT) suggested US consumer power may be waning, while Dallas Federal Reserve Bank Chairman Lorie Logan said the economic data did not support Fed Chairman Jerome Powell’s push to halt the central bank’s interest rate hike campaign.

The number of Americans who applied for unemployment benefits in mid-May fell to 242,000, according to US economic data.

However, the stock rebounded quickly and rose during the morning session as the Existing Home Sales Report and a host of other data showed the U.S. economy was in better shape than many economists expected, said Art Hogan, chief market strategist at B. Riley’s Wealth.

“We see a housing market that has more demand, which is a positive economic reading,” Hogan said during a telephone interview.

Both Target (TGT) and Walmart shared guidelines that indicated a weakening of US consumer discretionary spending. Still, retail sales economic data and corporate earnings reports from some of America’s largest retailers paint a mixed picture of consumer power, said Kim Caughey Forrest, founder and chief investment officer at Bokeh Capital Partners.

“Is it getting better or worse for consumers? We don’t really have an answer yet,” Forrest said during a telephone interview.

“The guidance from many of these retailers has been pretty mediocre when it comes to the state of consumers,” said Matt Maley, chief market strategist at Miller Tabak + Co. during a telephone interview.

Meanwhile, Fed-funds futures traders now see a 40.2% chance of another quarter-point rate hike by the Fed following Logan’s prepared remarks.

House Speaker Kevin McCarthy’s comments that a deal on the debt limit could be reached as early as next week helped bolster the Nasdaq while helping to stem even more stock sell-off, Maley said.

Still, “I don’t think investors in stocks or bonds expect to default,” Maley added.

Read: “The Doomsday Machine”: Here’s what can happen if the debt ceiling is exceeded

US stocks have traded in a narrow range in recent months, with the S&P 500 trading in a range of just 65 points – between 4100 and 4165 – in the last 10 sessions.

Investors received a flurry of economic data, including new jobless claims and the Philadelphia Fed factory survey for May, followed by existing home sales figures for April.

— Joseph Adinolfi

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(END) Dow Jones Newswires

05-18-23 1215ET

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