By Sruthi Shankar and Johann M Cherian
(Reuters) – U.S. stock indexes rebounded on Tuesday from a recent bout of losses as upbeat economic data soothed investor worries about an imminent recession triggered by the Federal Reserve’s aggressive interest rate hikes.
Separate reports showed new orders for key U.S.-manufactured capital goods unexpectedly rose in May, and sales of new single-family homes surged in the same month, while U.S. consumer confidence increased to near 1-1/2 year high in June.
“All the data we have is a confirmation to investors, as they climb this wall of worry that the economy has weakened but not collapsing,” Robert Pavlik, senior portfolio manager at Dakota Wealth.
Signs of resilience in the U.S. economy helped pull the blue-chip Dow out of a six-day slump and boosted the economically sensitive Dow Transports index and the small-cap Russell 2000 index.
The PHLX Housing index jumped 2.8% to hit an all-time high.
Traders are pricing in a 79.4% chance the Fed will raise interest rates by 25 bps to 5.25%-5.50% range in its July meeting, according to CME Group’s Fedwatch tool, up from 74.4% a day earlier.
More economic data is expected this week, including a key inflation measure, as well as a speech by Fed Chair Jerome Powell at the European Central Bank Forum in Sintra, Portugal, which could give me cues on the path of interest rates.
Hawkish comments from Powell last week stalled a rally on Wall Street that had pushed the S&P 500 and Nasdaq to an over one-year high and the Dow to a six-month peak.
Despite recent market weakness, a rally in growth stocks, an upbeat earnings season and hopes of the Fed ending its monetary tightening soon have set the main indexes on course for quarterly gains.
Meanwhile, the tech-heavy Nasdaq is on track to notch its best first-half performance in 40 years with a near 29% gain.
At 12:12 p.m. ET, the Dow Jones Industrial Average was up 144.24 points, or 0.43%, at 33,858.95, the S&P 500 was up 30.23 points, or 0.70%, at 4,359.05, and the Nasdaq Composite was up 134.49 points, or 1.01%, at 13,470.27.
Market heavyweights such as Amazon, Tesla and Nvidia rose about 1% each, while Meta Platforms added 3.0% after Citigroup raised its price target on the stock to the highest on Wall Street.
Snowflake climbed 3.1% after the cloud data analytics company announced partnership with Nvidia to allow customers to build AI models using their own data.
Walgreens Boots Alliance dropped 9.7% as the pharmacy chain cut its annual profit forecast on lower demand for COVID-19 tests and vaccines.
Other drugstore chains, including CVS Health and Rite Aid, also fell.
Lordstown Motors slumped 36.9% as the U.S. electric truck manufacturer filed for bankruptcy protection and put itself up for sale.
Advancing issues outnumbered decliners by a 2.74-to-1 ratio on the NYSE and 1.52-to-1 ratio on the Nasdaq.
The S&P index recorded 36 new 52-week highs and one new low, while the Nasdaq recorded 43 new highs and 120 new lows.
(Reporting by Sruthi Shankar, Johann M Cherian in Bengaluru and Terence Gabriel in New York; Editing by Shinjini Ganguli)
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