US Stocks Rise After Data Show Economy Is Holding Up: Markets Wrap

Stocks rose after better-than-estimated retail sales and a drop in jobless claims pointed to economic resilience. The dollar gained a day after speculation about the fate of Federal Reserve Chair Jerome Powell rattled markets. Short-dated Treasuries underperformed.

The S&P 500 was set for a fresh record, with tech leading the charge as a bullish outlook Taiwan Semiconductor Manufacturing Co. bolstered confidence in the artificial-intelligence spending spree. PepsiCo Inc. jumped on solid earnings. United Airlines Holdings Inc. signaled it may be able to beat its earnings targets  after customers resumed booking flights following a tumultuous start to 2025.

After a brief pause, the greenback resumed its advance for July - which is set to be its best month in 2025. Treasury two-year yields edged up while those on 30-year bonds fell. Money markets priced fewer than two Fed rate cuts this year, down from the possibility of three at the start of the month.

Relative calm prevailed a day after markets were jolted by speculation over Powell’s future before President Donald Trump downplayed the prospect of replacing him.

US retail sales saw a broad advance, tempering some concerns about a retrenchment in consumer spending. Meantime, applications for US unemployment benefits declined for a fifth straight week to the lowest level since mid-April, showing a solid job market.

“The consumer came back to life in June,” said David Russell at TradeStation. “Other data like initial jobless claims and Philly Fed also painted the picture of a strong economy. While it’s good for growth overall, it makes it harder to justify rate cuts.”

To Neil Dutta at Renaissance Macro Research, while retail sales beat estimates, enthusiasm ought to be tempered somewhat given the pick-up in consumer goods prices over the month.

The value of retail purchases, not adjusted for inflation, increased 0.6% after declines in the prior two months. That exceeded nearly all estimates in a Bloomberg survey of economists. Excluding cars, sales climbed 0.5%.

“A blowout retail sales number shows that consumers are still spending and are keeping the economy growing,” said Chris Zaccarelli at Northlight Asset Management. “There has been a lot of talk about tariffs and the stock market back to all-time highs, but there has been less talk about the economy at full employment and a consumer who continues to spend.”

Although valuations are high, Zaccarelli notes that as long as the economy continues to expand and unemployment remains low, then people will continue to spend and the flywheel can keep generating higher profits, which is the engine for higher stock prices.

“Consumers seem to be over the tariff shock in April and are back at it with spending,” said Jamie Cox at Harris Financial Group. “Now we just need to see if the Federal Reserve has enough inflation data to communicate more clearly that September will restart the rate cutting cycle.”

Estelle Ou at Bloomberg Economics says that despite the solid retail-sales report, given price increases in several goods categories, it’s difficult to untangle whether most of the rebound is due to price increases or solid underlying demand. 

“We think the former is more likely, given low business sentiment and signs of weakness in other discretionary services spending,” she noted.

Fed Governor Adriana Kugler said the US central bank should keep holding interest rates steady “for some time,” citing accelerating inflation as tariffs start to boost prices.

• United Airlines Holdings Inc. said the second half of the year has become more predictable and suggested it may be able to beat its earnings targets after customers resumed booking flights following a tumultuous start to 2025.

• International growth helped buoy PepsiCo Inc.’s second quarter earnings, as the snacks and beverage giant said it plans to lean into higher-protein offerings and smaller portion sizes.

• General Electric Co. boosted its full-year financial guidance and topped Wall Street’s profit estimates for the second quarter after rebounding demand in the aviation market softened the impact of a global trade war.

• Meta Platforms Inc. investors say they have reached a settlement with current and former directors at the company to end a multibillion-dollar case in Delaware.

• Chevron Corp. is on the cusp of reaching a production plateau in the largest US oil field, allowing it to reap billions of dollars of additional cash flow in the next few years.

• Waymo is more than doubling its service territory in Austin as the driverless taxi firm looks to fend off competition from Tesla Inc.

• Uber Technologies Inc. is teaming up with electric vehicle maker Lucid Group Inc. and self-driving tech startup Nuro to launch a robotaxi fleet.

• U.S. Bancorp reported net interest income that missed analysts’ estimates in the first earnings report under new Chief Executive Officer Gunjan Kedia.

• ManpowerGroup Inc. posted quarterly profit and revenue that beat estimates and indicated the global labor market is stabilizing.

• Elevance Health Inc. cut its profit guidance for the year on higher medical costs in Affordable Care Act plans and lagging reimbursement from Medicaid, the latest in a series of disappointments from health insurers in recent months.

• Roblox Corp. is adding new safety features, including an age-estimation tool that relies on video selfies, in an effort to better protect its kid-heavy user base.

• Novartis AG announced disappointing sales for a key psoriasis drug and the looming retirement of its respected finance chief, which overshadowed a modest outlook raise.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.5% as of 11:47 a.m. New York time

• The Nasdaq 100 rose 0.7%

• The Dow Jones Industrial Average rose 0.4%

• The Stoxx Europe 600 rose 1%

• The MSCI World Index rose 0.6%

• Bloomberg Magnificent 7 Total Return Index rose 0.4%

• The Russell 2000 Index rose 1.2%

• Philadelphia Stock Exchange Semiconductor Index rose 1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%

• The euro fell 0.4% to $1.1598

• The British pound was little changed at $1.3415

• The Japanese yen fell 0.4% to 148.51 per dollar

Cryptocurrencies

• Bitcoin fell 0.8% to $119,009.92

• Ether rose 1.1% to $3,419.82

Bonds

• The yield on 10-year Treasuries was little changed at 4.45%

• Germany’s 10-year yield declined one basis point to 2.68%

• Britain’s 10-year yield advanced two basis points to 4.66%

• The yield on 2-year Treasuries advanced two basis points to 3.91%

• The yield on 30-year Treasuries declined two basis points to 4.99%

Commodities

• West Texas Intermediate crude rose 1.1% to $67.10 a barrel

• Spot gold fell 0.3% to $3,336.80 an ounce