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The S&P 500 rose on Thursday, driven by stronger-than-expected retail sales and growing investor optimism around corporate earnings. By early afternoon, the Dow Jones Industrial Average was up 128 points (0.3%), the S&P 500 had gained 0.4%, and the NASDAQ Composite rose 0.8%.
Retail Sales Rebound in June
U.S. retail sales increased by 0.6% in June, recovering from a 0.9% decline in May. The growth, reported by the U.S. Commerce Department, was significantly better than the 0.1% rise economists had expected. The data shows consumers are still spending, suggesting economic resilience despite inflationary pressures.
In other economic updates, the Philadelphia Fed Manufacturing Index returned to positive territory, signalling recovery in the manufacturing sector, while jobless claims dipped slightly to 221,000, pointing to a stable labour market.
Despite strong data, Federal Reserve officials remain cautious. While markets expect interest rate cuts later this year, Fed President John Williams emphasised it is still too soon to consider reductions due to persistent inflation risks.
Corporate Earnings in Focus, Netflix Up Next
The spotlight is also on corporate earnings, with Netflix set to report its second-quarter results after market close. Analysts believe Netflix will post strong numbers, but some warn the stock’s recent run may reflect overly high expectations.
PepsiCo shares rose after beating profit estimates, showing strength in its international segment. GE Aerospace also reported solid Q2 results, leading to an upward revision of its full-year outlook. Meanwhile, United Airlines shares slipped after warning of lower earnings due to operational issues at Newark Airport.
Lucid Group saw a huge 35% jump after announcing a new partnership with Uber and Nuro to develop self-driving robotaxis. Meanwhile, Taiwan Semiconductor Manufacturing reported record Q2 profits, driven by growing demand for AI chips. On the downside, GSK plc shares fell more than 3% after U.S. regulators declined to approve its blood cancer treatment, Blenrep, over safety concerns.
Trump-Powell Tension and Trade Updates
Markets were volatile earlier in the week following rumours that President Trump planned to fire Federal Reserve Chair Jerome Powell. Trump later clarified he isn’t firing Powell but said he would “love” for him to resign. The incident renewed concerns over Fed independence.
On trade, Trump said a deal with India is nearing completion, following a recent agreement with Indonesia. However, talks with the European Union remain tense, with the EU pushing back against a proposed 30% tariff and threatening retaliation. Trump has maintained an August 1 deadline for resolving the disputes.