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Wall Street jumps on retailer outlook hikes, ebbing Fed fears

05/26/2022 | 04:32pm EDT
FILE PHOTO: A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.)

* Macy's, discount retailers' stocks climb after raising outlooks

* Weekly jobless claims dip; Q1 economic contraction confirmed

* Indexes up: Dow 1.61%, S&P 1.99%, Nasdaq 2.68%

May 26 (Reuters) - Wall Street closed sharply higher on Thursday after optimistic retail earnings outlooks and waning concerns about overly aggressive interest rate hikes by the Federal Reserve put investors in a buying mood.

All three major U.S. stock indexes posted solid gains, with economically sensitive consumer discretionary and microchip stocks beating the broader market.

The tech-laden Nasdaq surged the most - its 2.7% advance was powered by gains in Apple Inc, Tesla Inc and Inc.

On a weekly basis, the S&P 500, Nasdaq and Dow are on track to snap their longest losing streaks in decades, during which the benchmark S&P plummeted 14.1% and brought it within striking distance of being confirmed as a bear market.

At current levels, all three indexes are poised to notch their biggest weekly gains since mid-March.

"With first quarter earnings essentially over and coming in better than expected, combined with the Fed indicating that they are going to be front-end loading its rate-tightening policy and implying it may pause later in the fall, all of that has given investors reason to feel optimistic," said Sam Stovall, chief investment strategist at CFRA Research in New York.

Upbeat guidance from retailers appeared to offset dour warnings from their peers in recent weeks.

Department store operator Macy's Inc jumped 19.3% after raising its annual profit forecast.

Discount chains Dollar General Corp and Dollar Tree advanced by 13.7% and 21.9%, respectively, following their annual sales forecast hikes, suggesting consumers are shopping for less costly goods amid decades-high inflation.

The minutes from the Federal Open Market Committee's (FOMC) most recent monetary policy meeting calmed fears that the U.S. central bank could turn more hawkish, a concern which has fed into market volatility in recent weeks.

"We have had 65% more daily price moves of 1% or more than the average since WW2," Stovall said.

"If the Fed is too aggressive, they'll choke off inflation but also choke off economic growth," he added. "It's like in the winter you want to tap your brakes, not slam on them, to maintain control and avoid spinning out."

Economic data released on Thursday, including jobless claims, pending home sales and GDP, brought good news wrapped in bad, suggesting the economy is showing just enough softness to prompt a dovish pivot from the Fed by autumn.

The Dow Jones Industrial Average rose 516.91 points, or 1.61%, to 32,637.19; the S&P 500 gained 79.11 points, or 1.99%, to 4,057.84; and the Nasdaq Composite added 305.91 points, or 2.68%, to 11,740.65.

Of the 11 major indexes in the S&P 500, all but real estate ended the session up. Consumer discretionary led the gainers, rising 4.8%, with tech and financials placing and showing at 2.5% and 2.3%, respectively.

Shares of Twitter Inc jumped 6.4% on news that the social media company is suing billionaire Elon Musk for delayed disclosure of his stake in the company.

U.S.-listed shares of Alibaba Group rose 14.8% after the Chinese e-commerce company beat estimates, even as it declined to provide forward guidance in view of COVID-19 restrictions in China.

Advancing issues outnumbered declining ones on the NYSE by a 5.16-to-1 ratio; on Nasdaq, a 2.95-to-1 ratio favored advancers.

The S&P 500 posted three new 52-week highs and 29 new lows; the Nasdaq Composite recorded 28 new highs and 116 new lows.

Volume on U.S. exchanges was 11.43 billion shares, compared with the 13.22 billion average over the last 20 trading days. (Reporting by Stephen Culp; additional reporting by Devik Jain and Anisha Sircar in Bengaluru; editing by Jonathan Oatis)

© Reuters 2022
Stocks mentioned in the article
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TESLA, INC. 4.52% 737.12 Delayed Quote.-30.25%
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Financials (USD)
Sales 2023 28 120 M - -
Net income 2023 1 830 M - -
Net Debt 2023 1 942 M - -
P/E ratio 2023 19,4x
Yield 2023 -
Capitalization 35 302 M 35 302 M -
EV / Sales 2023 1,32x
EV / Sales 2024 1,24x
Nbr of Employees 136 226
Free-Float 98,2%
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Technical analysis trends DOLLAR TREE, INC.
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Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 27
Last Close Price 157,21 $
Average target price 171,10 $
Spread / Average Target 8,84%
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Managers and Directors
Michael A. Witynski President, Chief Executive Officer & Director
Kevin S. Wampler Chief Financial Officer
Richard W. Dreiling Executive Chairman
James A. Paisley Chief Information Officer
Thomas R. O’Boyle Chief Operating Officer
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