(Bloomberg) — Traders on Wall Street pushed stock prices upward as bond yields decreased, fueled by recent economic data that led to expectations the Federal Reserve might lower interest rates twice this year to avert a recession.
In a clear recovery, equities recouped previous losses, with the S&P 500 rising for the fourth consecutive day. However, caution remained as a rally sparked concerns over a potentially overheated market, shifting investor focus towards defensive dividend-paying stocks that had underperformed recently. In contrast, many major tech companies saw declines, with shorter-term Treasury bonds showing the most significant gains.
Recent data revealed that prices for US producers unexpectedly dropped the most in five years, indicating that businesses are beginning to cope with the impact of higher tariffs. Retail sales growth noticeably slowed, while factory output fell for the first time in half a year and manufacturing in New York continued to decline. Builder confidence also decreased.
Jamie Cox from Harris Financial Group commented, “If you align with the stagflation perspective, this data isn’t supporting your view.” He noted that even as growth shows signs of slowdown, disinflation continues to hold firm.
The S&P 500 increased by 0.3%, the Dow Jones Industrial Average climbed 0.4%, while the Nasdaq 100 experienced little change. Cisco Systems Inc. soared following a positive earnings outlook, while Walmart Inc. reversed a significant drop due to concerns about potential price hikes. UnitedHealth Group Inc. faced a sharp decline amid reports of a criminal investigation into possible Medicare fraud.
Ten-year Treasury yields fell by eight basis points to 4.46%. Earlier in the day, long-term Treasuries fluctuated significantly due to large trades, with the 30-year yield momentarily nearing 5%. The Bloomberg Dollar Spot Index decreased by 0.2%.
Oil prices fell after Donald Trump indicated that the US and Iran were approaching an agreement regarding Tehran’s nuclear program, while Ellen Zentner of Morgan Stanley Wealth Management stated that today’s data does not alter the existing narrative. She remarked, “Retail sales imply that consumers are getting selective, and there’s no widespread indication of layoffs.” The potential repercussions of tariffs are expected to materialize further down the line.
