Global stock indexes mostly remained positive, and the U.S. dollar held its gains on Tuesday following strong U.S. retail sales data, which signaled resilience in the economy.
Retail sales data showed no change in June from May, with May’s figures being higher than initially estimated.
The strength of the economy, as indicated by these sales figures, might weaken the argument for the Federal Reserve to cut interest rates. However, this did not alter the investors’ outlook, who, according to CME’s FedWatch Tool, are fully pricing in a rate cut of at least 25 basis points by the Fed at its September meeting.
“We had been watching the softening in retail sales over the last couple of months,” said Dustin Thackeray, chief investment officer at Crewe Advisors in Salt Lake City. Tuesday’s figures suggest that consumers are still spending, which the market perceived as favorable, he added.
MSCI’s global stock gauge rose 1.09 points, or 0.13%, to 829.82.
Fed Chair Jerome Powell said on Monday that recent inflation data has increased policymakers’ confidence that price pressures are sustainably decreasing.
Investors also considered the implications of a potential Donald Trump victory in the upcoming U.S. presidential election following an assassination attempt on Trump on Saturday. The former president has supported policies traditionally seen as business-friendly, such as deregulation, increasing tariffs on certain foreign imports, and cutting taxes.
The Dow Jones Industrial Average rose 677.91 points, or 1.68%, to 40,889.63, the S&P 500 gained 29.63 points, or 0.53%, to 5,660.85, and the Nasdaq Composite added 16.93 points, or 0.09%, to 18,489.58.
“Obviously, the market liked the boost in his ratings and the potential for a Trump presidency… we know what we’re getting with Trump,” Thackeray said.
UnitedHealth Group (NYSE) significantly boosted the Dow and S&P 500, gaining more than 6% after strong results.
In Europe, the STOXX 600 fell 0.28%.
A CLOSE RACE
Opinion polls indicate a close race between Trump and President Joe Biden, though Trump leads in several key states.
Trump’s nomination of Ohio Sen. J.D. Vance, a former critic, as his vice-presidential running mate, also impacted financial markets.
“Vance is particularly tough on China, which contributed to the weakness in Chinese assets today,” said Colin Asher, an economist at Mizuho.
Shares of Trump Media & Technology Group fell 8% after significant gains on Monday.
The dollar index, which measures the greenback against a basket of currencies, softened slightly but still showed a gain of 0.07% at 104.31, with the euro down 0.04% at $1.089. Against the Japanese yen, the dollar strengthened 0.28% to 158.45.
Investors are closely monitoring the yen after Tokyo’s suspected intervention last week disrupted the popular carry trade. Japanese officials issued fresh warnings of possible measures.
Data on Tuesday indicated that the Bank of Japan likely intervened a second time on July 12, spending 2.14 trillion yen ($13.50 billion) to support the currency, following approximately $22.43 billion apparently spent on intervention the previous day.
The yield on benchmark U.S. 10-year notes fell further during the day, declining 5.8 basis points to 4.171% from 4.229% late on Monday.
U.S. crude futures fell $1.15 to settle at $80.76 a barrel.
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