Strong earnings reports from several big retailers helped drive stocks broadly higher on Wall Street Wednesday as the market bounced back from its first loss in four days.
Target notched its biggest-ever gain, while Lowe's had its best day in more than a year, leading a broad rally in companies that rely on consumer spending. Nordstrom, Kohl's, Gap and other retailers closed higher.
Technology companies accounted for a big share of the gains. Financial stocks rose as bond prices fell, pushing yields higher. Real estate and materials stocks lagged the rest of the market.
The S&P 500 rose 23.92 points, or 0.8%, to 2,924.43. The Dow Jones Industrial Average gained 240.29 points, or 0.9%, to 26,202.73. The Nasdaq added 71.65 points, or 0.9%, to 8,020.21. The Russell 2000 index of smaller company stocks picked up 11.84 points, or 0.8%, to 1,509.85.
Major indexes in Europe also finished broadly higher.
Investors have been worried that U.S. economic and corporate earnings growth could stumble under the strain of a slowing global economy and the costly trade war between the U.S. and China. But the strong quarterly results from the retailers encouraged traders, who see the performance as a sign that U.S. consumers, which account for 70% of U.S. economic growth, are healthy.
"We had a couple of great earnings reports this morning, especially Target, which is a good barometer of the consumer," said Dan Heckman, national investment consultant at U.S. Bank Wealth Management. "The consumer still appears to be spending and doing well."
Traders had a muted reaction to the afternoon release of notes from the Federal Reserve's policymaking meeting last month. The minutes showed officials were divided in their decision to cut interest rates for the first time in a decade.
Investors have been seeking insight into the Fed's willingness to make further interest rate cuts to help shore up the economy. Traders are now looking ahead to Friday, when Fed Chairman Jerome Powell is scheduled to speak at the central bank's annual conference in Jackson Hole, Wyo.
The stock market has been volatile this month as investors try to parse conflicting signals on the U.S. economy and determine whether a recession is on the way. A key concern is that the U.S.-Chinese tariff war will weigh on global economic growth.
President Donald Trump's administration has imposed a 25% tariff on $250 billion in Chinese imports. A pending 10% tariff on another $300 billion in goods would hit everything from toys to clothing and shoes that China ships to the United States, however some 60% of the new tariffs wouldn't go into effect until mid-December, and others were taken off the table altogether.
The potential impact those tariffs could have on U.S. consumers could hurt sales for Target and other big retailers. Home Depot on Tuesday cut its sales expectations for the year in part because of the potential tariff impact.
A look at Target and Lowe's earnings Wednesday appeared to dim investors' concerns about the effect tariffs may have on U.S. consumers.
Target soared 20.4% after the company easily beat profit forecasts for its second quarter. Target has been pushing faster delivery and investing heavily in new private label brands.
Traders also bid up shares in Lowe's sharply higher after the home improvement retailer's latest quarterly results blew past expectations. The stock jumped 10.4%.
Lowe's solid earnings came a day after rival Home Depot reported strong results of its own. Home Depot added 1.6%.
Business on 08/22/2019