Wall Street extended its rally on Tuesday as a spate of economic data appeared to support the case for the U.S. Federal Reserve to implement its third and final rate cut of the year in December, while softness in the tech sector limited the Nasdaq’s gains. All three major U.S. stock indexes closed in positive territory, with the blue-chip Dow out front. But sagging shares of artificial intelligence frontrunner Nvidia NVDA.O limited the Nasdaq’s advance. Nvidia dipped 2.6%, while the Philadelphia SE Semiconductor index .SOX eked out a 0.2% gain.
An influx of economic data was released, much of it supporting views that the Federal Open Market Committee will reduce its key Fed funds target rate by 25 basis points at its upcoming monetary policy meeting, but official reports were stale due to delays related to the recent protracted government shutdown. The Commerce and Labor departments issued September reports on retail sales and producer prices, respectively, which showed spending softened and that inflation continued to cool. More recent data from the Conference Board showed a worse-than-expected deterioration of consumer confidence, with near-term expectations tumbling nearly 12%.
Financial markets agree, and are currently pricing in an 84.7% likelihood of that happening, compared with 50.1% a week ago. That probability has gained strength in recent days following dovish remarks by New York Fed President John Williams and Fed Governor Christopher Waller, among others. U.S. Treasury Secretary Scott Bessent said there was a good chance the U.S. President will name his pick for Powell’s successor before Christmas, with White House economic adviser Kevin Hassett widely seen as a likely frontrunner.
The Dow Jones Industrial Average .DJI rose 664.18 points, or 1.43%, to 47,112.45, the S&P 500 .SPX gained 60.77 points, or 0.91%, to 6,765.89 and the Nasdaq Composite .IXIC gained 153.59 points, or 0.67%, to 23,025.59. Among the 11 major sectors in the S&P 500, healthcare .SPXHC led the gainers, while energy shares .SPNY suffered the steepest percentage decline.
While softer-than-expected retail sales data and the dour consumer confidence reading raised concerns over the health of the consumer, a smattering of generally positive retail earnings helped send the S&P 500 retail index .SPXRT up 2.0%. Department store chain Kohl’s KSS.N jumped 42.5% and clothing retailer Abercrombie & Fitch ANF.N surged 37.5%, after the companies hiked their annual earnings forecasts. But Burlington Stores BURL.N tumbled 12.2% after third-quarter revenue missed estimates.
Alphabet’s shares GOOGL.O rose 1.5% after the Information reported Meta Platforms < META.O> was in discussions to use Google’s AI chips in its data centers from 2027 and rent chips from Google Cloud by next year. Meta Platforms added 3.8%. U.S.-listed shares of AlibabaBABA.N slipped 2.3% even after the Chinese e-commerce firm beat quarterly revenue expectations.
Advancing issues outnumbered decliners by a 4.05-to-1 ratio on the NYSE. There were 181 new highs and 45 new lows on the NYSE. On the Nasdaq, 3,355 stocks rose and 1,296 fell as advancing issues outnumbered decliners by a 2.59-to-1 ratio. The S&P 500 posted 40 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 140 new highs and 80 new lows. Volume on U.S. exchanges was 16.68 billion shares, compared with the 19.78 billion average for the full session over the last 20 trading days.
Reporting by Stephen Culp in New York; Additional reporting by Johann M Cherian, Sruthi Shankar and Purvi Agarwal in Bengaluru; Editing by Matthew Lewis.
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