Market Rose on Better-than-Expected Data

By Joyce Yu

Philadelphia, PA–U.S. stocks got a boost on Thursday on better-than-expected May retail sales data and promise from European Central Bank that there will be no rate hike before the middle of next year.

Data on Thursday showed U.S. retail sales, fuelled by motor sales in particular, increased more than expected in May by 0.8%, its biggest advance since November 2017. The job market is robust as well. The Labor Department said initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 218,000 for the week ended June 9, far below economists’ forecast of 224,000, declining to a near 44-1/2-year low.

“The claims data suggest that the labor market is healthy and that job growth will remain strong,” said Daniel Silver, an economist at JPMorgan in New York. “After a mediocre start to the year, … consumer spending in Q2 has definitely improved,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, told CNBC. “Consumers are seeing the tax cuts in their paychecks and higher wages which is helping to offset a rising cost of living.”

Fed and European Bank have concluded their policy meetings. European Central Bank’s promised of no rate hike before the middle of next year, but said it would wind down its 2.55 trillion euro stimulus program by the close of the year. This comes after the Federal Reserve announced Wednesday a new rate hike and indicated that two other increases are possible until the end of the year. The Fed also ended its pledge to keep rates low enough to bolster the economy for “some time” and signalled it would tolerate above-target inflation at least through 2020.

“There’s some concern that we’re going to see a lot tighter policy. But both the Fed and the ECB, especially, are very accommodative at this point and it doesn’t look like it’s going to derail the expansion that we’re seeing anytime soon,” Scott Brown, chief economist at Raymond James in St. Petersburg, Florida, told the Reuters.

Dealmaking news also played a part in today’s market rise. Comcast jumped 4.4% after the company offered Twenty-First Century Fox $65 billion to lure Fox away from a merger with Walt Disney, who agreed to a $52.4 billion deal. The news comes a day after a judge approved AT&T’s acquisition of Time Warner who both rose 0.8%.

Any gains in the market, however, remain rather moderate as tomorrow marks the deadline for the White House to publish Chinese tariff list covering $50 billion worth of products.