NEW YORK (Reuters) – Wall Street’s main indexes rose on Wednesday as upbeat earnings from retailers pointed to strength in U.S. consumer demand, and held gains after minutes from last month’s Federal Reserve meeting showed policymakers had debated a more aggressive interest rate cut.
U.S. stocks moved solidly higher following better-than-expected results from retailers Target Corp (TGT.N) and Lowe’s Cos Inc (LOW.N). Target shares surged 20.4% after the big-box retailer raised its annual earnings forecast. Lowe’s shares climbed 10.4% after the home-improvement chain beat profit estimates.
Robust U.S. consumer spending has helped stave off fears of an impending recession. Concerns about an economic slowdown rose as the yield curve between 2-year and 10-year Treasuries briefly inverted last week. Though the yield curve again briefly inverted on Wednesday, it had little impact on stocks this time around.
“As long as we have the healthy environment in jobs that we have right now, it’s going to be very difficult to shake people’s confidence,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago. “At the end of the day, if people are employed, they’re going to go out and spend some money.”
Minutes from the Fed’s policy-setting meeting on July 30-31, when the Fed cut rates by 25 basis points, showed that policymakers debated cutting rates more aggressively. Some participants preferred a 50-basis-point cut, but the committee was united in wanting to avoid the appearance of being on a path to further rate cuts.
The Dow Jones Industrial Average .DJI rose 240.29 points, or 0.93%, to 26,202.73, the S&P 500 .SPX gained 23.92 points, or 0.82%, to 2,924.43 and the Nasdaq Composite .IXIC added 71.65 points, or 0.90%, to 8,020.21.
Fed Chair Jerome Powell is scheduled to speak on Friday at the Jackson Hole, Wyoming, central bankers’ conference. Several market strategists said Powell’s comments at the conclave would offer greater insight on the course of monetary policy than the minutes from the July Fed meeting given developments since then, including U.S. President Donald Trump’s announcement of tariffs on an additional $300 billion worth of Chinese goods.
The minutes “gave very little forward guidance,” said Robert Phipps, director at Per Stirling Capital Management in Austin, Texas. “Jackson Hole is going to be (Powell’s) first chance to really talk since the latest tariff announcement.”
On Wednesday, the nonpartisan Congressional Budget Office said changes in U.S. and foreign trade policies since January 2018 would reduce inflation-adjusted U.S. gross domestic product by 0.3% from what it would be otherwise by 2020.
Among individual stocks, shares of Toll Brothers Inc (TOL.N) slipped 4.5% after the luxury homebuilder posted a decline in orders, hinting at weaker demand for new homes.
Advancing issues outnumbered declining ones on the NYSE by a 2.51-to-1 ratio; on Nasdaq, a 2.14-to-1 ratio favored advancers.
The S&P 500 posted 31 new 52-week highs and five new lows; the Nasdaq Composite recorded 59 new highs and 67 new lows.
Volume on U.S. exchanges was 5.68 billion shares, compared with the 7.53 billion-share average for the full session over the last 20 trading days.
Reporting by April Joyner; additional reporting by Lewis Krauskopf in New York and Medha Singh and Akanksha Rana in Bengaluru; editing by Leslie Adler and Jonathan Oatis