ASX set to jump as retailers boost Wall Street

Shares rose sharply in afternoon trading on Wall Street on Thursday as investors cheered on a strong set of quarterly earnings from Macy’s and other retailers.

The S&P 500 is 2.2 percent higher in late trading and is stable in green for the week after a few choppy days of trading. The benchmark index comes after seven straight weekly losses, its longest stretch since 2001.

Wall Street is about to end its seven-week losing streak. Credit:AP

The Dow Jones Industrial Average is up 1.8 percent and the Nasdaq is up 2.7 percent. Smaller corporate shares also made strong gains, a sign of a rise in the economy. The Russell 2000 index rose 2.5 percent. The Australian stock market is set for a positive opening, with futures at 5:06 AEST pointing to a gain of 75 points, or 1.1 percent at the opening. On Thursday, the ASX fell 0.7 percent.

Bond yields rose. The interest rate on the 10-year Treasury, which helps set interest rates on mortgages, rose to 2.76 percent from 2.74 percent late on Wednesday.

Retailers led the wider market higher. Macy’s rose 18.7 percent after raising its earnings forecast for the year following a strong first-quarter financial report. The Dollar General picked up 14 percent and the Dollar Tree jumped 20.6 percent after the discount trade reported solid gains and gave investors encouraging forecasts.

Retail is closely monitored by investors looking for more information on how much pain inflation inflicts on businesses and consumers. Weak reports from several large companies last week, including Target and Walmart, scared an already volatile market.

“We are not convinced that we are completely out in the woods here,” said Philip Orlando, head of stock market strategy at Federated Hermes. “There were a lot of negative reports last week and what those companies have been talking about is what’s happening in the economy.”

Inflation has been high for four decades and companies have raised the cost of everything from food to clothing to offset higher costs. The effects of Russia’s invasion of Ukraine exacerbated inflationary pressures by pushing for higher energy and important food costs. Supply chain problems were exacerbated in the wake of China’s shutdown of several major cities as the country sought to limit cases of covid-19.

Consumers have been resilient when it comes to spending, but the pressure from inflation is still persistent and can lead to spending being cut back or shifted from more expensive items to necessities.

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