Stock indexes edge upward ahead of retail reports
NEW YORK — Wall Street drifted higher Monday ahead of a week of reports measuring the strength of U.S. shoppers, amid hopes their spending can steer the economy out of a recession.
The S&P 500 added 25.67, or 0.6%, to 4,489.72, though slightly more stocks fell than rose within the index. The Dow Jones Industrial Average edged up by 26.23 points, or 0.1%, to 35,307.63 in a quiet day of trading. The Nasdaq composite gained 143.48, or 1.1%, to 13,788.33.
Shares of U.S. Steel jumped to one of the market’s bigger gains, up almost 37%. It said over the weekend that it rejected a buyout offer from Cleveland-Cliffs and that it’s heard multiple offers.
Cleveland-Cliffs rose 8.8% after it said it offered more than $7 billion in cash and stock for the steelmaker and that it’s ready to move on the offer immediately.
On the losing end of Wall Street was Nikola, which sank 6.7%. The zero-emission truck company recalled more than 200 of its electric vehicles after an investigation indicated a problem with a component in the battery pack could be the cause of a fire. It earlier suggested foul play could be at play in the truck fire at its headquarters.
Across the rest of the market, trading was relatively quiet. The S&P 500 has retrenched by 2.2% in August after soaring 19.5% through the first seven months of the year. Critics have been saying a pullback was due, arguing Wall Street too quickly and forcefully latched onto the belief that inflation would continue to cool and the economy would avoid a recession.
A bulwark keeping the economy afloat has been strong spending by U.S. consumers, which has been propped up by a remarkably resilient job market.
The U.S. government is scheduled today to give the latest monthly update on sales at retailers across the country. Economists say it’s one of the week’s most important reports, and they expect it to show growth accelerated to 0.4% in July from 0.2% in June.
Several big retailers are also on the schedule this week to show how much profit they made in the latest quarter. Home Depot, Target, TJX and Walmart will all be reporting this week, as earnings reporting season for the spring nears an end.
Inflation has been moderating since hitting a peak last summer, but it remains high and is denting Americans of all incomes.
Conditions may be getting tougher in upcoming months, as rising interest rates make credit-card and other payments more expensive. Student loan payments will also weigh on consumers, and many have been spending down savings they had built up during the pandemic.
Economists at Deutsche Bank say their expectations for a stumble in consumer spending during the last three months of the year are a reason they’re forecasting a mild recession lasting through the first half of next year. They, though, also say the resilience of U.S. consumers so far has raised the probability of no recession.
The week’s other big economic highlight will be Wednesday’s release of the minutes from the Federal Reserve’s last meeting. At that meeting, the central bank raised its main interest rate to the highest level in more than two decades. It was the Fed’s 11th increase in 17 months as it tries to corral the worst inflation since the 1980s.
The hope on Wall Street is that will prove to be the final increase of this cycle. That would provide some relief because high rates work to lower inflation by bluntly slowing the entire economy and hurting prices for stocks and other investments.
Traders broadly expect the Fed to hold rates steady at its next meeting in a little more than a month, according to data from CME Group.
In the bond market, the yield on the 10-year Treasury rose to 4.19% from 4.16% late Friday. It helps set rates for mortgages and other important loans. The two-year Treasury yield, which moves more on expectations for the Fed, rose to 4.96% from 4.90%.