Target’s (TGT.N) stock rose 17.8%, marking the largest percentage gain in a single day since August 2019, following the retailer’s forecast of a fourth-quarter profit that was significantly higher than anticipated due to lower supply-chain costs. – Wall Street
While retail stocks were bolstered by an optimistic forecast from Target (TGT.N), U.S. stocks closed marginally higher on Wednesday as new inflation data confirmed investor hopes that the Federal Reserve is done raising interest rates.
Target’s (TGT.N) stock rose 17.8%, marking the largest percentage gain in a single day since August 2019, following the retailer’s forecast of a fourth-quarter profit that was significantly higher than anticipated due to lower supply-chain costs.
The positive outlook for Target helped other retailers’ shares, such as Macy’s (M.N), which saw a 7.5% increase, and Kohl’s (KSS.N), which closed nearly 9% higher. With an increase of 0.7%, the S&P 500 consumer staples index (.SPLRCS), which comprises Target, was the top sector gainer.
Tuesday’s stock market surge came about as hope that the Fed might be able to refrain from hiking interest rates further was increased by a consumer price index (CPI) reading that was lower than anticipated.
Further information released on Wednesday revealed that October saw the largest drop in producer prices in three and a half years due to lower gasoline prices, providing additional proof that price pressures are lessening.
Additionally, on Wednesday, data on retail sales indicated a 0.1% decrease in October, which was less than anticipated based on a Reuters poll of economists, who had predicted a 0.3% decline.
Ronald Temple, chief market strategist at Lazard, said, “Those two data points reaffirmed the message from Tuesday that the Fed seems to be navigating the soft landing quite well.”
In response to the significant movement made by Wall Street is three main indexes during the previous session, Temple stated that the data from Wednesday “doesn’t change the narrative.”
The S&P 500 (.SPX) gained 7.18 points, or 0.16%, at 4,502.88, the Nasdaq Composite (.IXIC) added 9.46 points, or 0.07%, at 14,103.84, and the Dow Jones Industrial Average (.DJI) increased 163.51 points, or 0.47%, to 34,991.21.
Following the release of the consumer price data on Tuesday, the tech-heavy Nasdaq (.IXIC) and benchmark S&P 500 (.SPX) posted their largest daily percentage gains in over six months.
Energy (.SPNY), down 0.3%, was the largest decliner among the S&P 500’s 11 major sectors, closely followed by utilities (.SPLRCU). With a push from Walt Disney (DIS.N), communications services advanced the most after consumer staples. Following news that activist investor ValueAct Capital had purchased stock in the entertainment company, the stock increased by 3%.
The likelihood of a halt to rate hikes is especially encouraging for smaller businesses, as they rely more heavily on floating rate loans. As a result, the Russell 2000 (.RUT) index increased once more, having closed 5.4% higher on Tuesday.
According to CME Group’s Fedwatch tool, money market traders have fully priced in the likelihood that the US Federal Reserve will maintain unchanged interest rates in December. Additionally, they predict that the cycle’s first rate cut will begin in May 2024.
Investors were also waiting to see how U.S. President Joe Biden and Chinese Leader Xi Jinping fared in their first meeting of the year, hoping that the discussions on artificial intelligence, drug trafficking, and military conflicts would defuse tensions between the two superpowers.
With widespread support from members of both parties, the U.S. House of Representatives passed a temporary spending bill that would prevent a government shutdown, further boosting the mood.
Before the current funding for federal agencies expires at midnight on Friday, the Senate and the Republican-controlled House must pass legislation that Biden can sign into law to avert a shutdown.
Retailer TJX’s (TJX.N) shares dropped 3.3% as a whole after the company predicted current-quarter profit below Wall Street projections and indicated that rising costs were putting pressure on margins.
Following Berkshire Hathaway (BRKa.N) CEO Warren Buffett’s acquisition of a stake in Sirius XM (SIRI.O), the stock of the audio entertainment company surged 6%.
11.67 billion shares were traded on US exchanges, exceeding the 11.15 billion average over the previous 20 sessions.
On the NYSE, advancers outnumbered decliners by a ratio of 1.36 to 1; on Nasdaq, the ratio was 1.32 to 1. In favor of advancers.
While the Nasdaq Composite recorded 106 new highs and 89 new lows, the S&P 500 recorded 42 new 52-week highs and no new lows.
