PARIS (Reuters) – The New York Stock Exchange opened higher on Tuesday after the publication of a U.S. retail sales indicator that suggested a stagnation in consumption without calling into question hopes of an interest rate cut soon.
In early trading, the Dow Jones index gained 179.85 points, or 0.45 percent, to 40,391.57 points, setting a record. The broader Standard & Poor’s 500 rose 0.30 percent to 5,648.61 points.
The Nasdaq Composite gained 0.41%, or 76.0 points, to 18,548.56.
An hour before Wall Street opened, the U.S. Commerce Department said retail sales were unchanged in June after rising 0.3 percent in May, while economists polled by Reuters had forecast a 0.3 percent decline.
In the eyes of some economists, this stagnation shows that households are increasingly sensitive to prices and are focusing on their essential needs.
PepsiCo Chief Executive Ramon Laguarta said last week that low-income consumers were “at their wit’s end” and “devising many strategies to keep their budgets in check before the end of the month.”
Weak retail sales support the view that the economy is on a soft landing, fueling the prospect of lower interest rates.
In the bond market, the yield on 10-year Treasuries fell by almost three basis points to 4.2021%, while the probability of a 25-point reduction in Fed rates in September is now 88%, according to CME’s Fedwatch barometer.
The results published by the major American banks also liven up trading. Bank Of America advances by 2.81% after optimistic forecasts for net interest income in the fourth quarter. Morgan Stanley falls by 1.74% due to wealth management revenues below analysts’ forecasts.
In other stocks of note, UnitedHealth gained 2.58% after reporting better-than-expected second-quarter profit.
Match is up 6.02% as activist investor Starboard puts pressure on Tinder’s parent company after increasing its stake in the group to more than 6.5%, according to the Wall Street Journal.
(Written by Claude Chendjou, edited by Kate Entringer)
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