Stock market today: Wall Street rallies after passing the first of several tests set for this week
By Stan Choe, The Associated Press on August 13, 2024.
NEW YORK (AP) – U.S. stocks rose to one of their best days of the year as Wall Street relaxed after the first of several highly anticipated reports on the economy this week came in better than expected. The S&P 500 rallied 1.7% Tuesday after the government reported inflation at the wholesale level slowed last month by more than anticipated. The Dow Jones Industrial Average gained 1%, and the Nasdaq composite climbed 2.4%. Starbucks soared after naming Brian Niccol, the head of Chipotle, as its new CEO. Treasury yields eased ahead of more reports this week on inflation and retail sales. THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below. NEW YORK (AP) – U.S. stocks are rising toward one of their best days of the year, and Wall Street is relaxing on Tuesday after the first of several highly anticipated reports on the economy this week came in better than expected. The S&P 500 was 1.6% higher in late trading and on track for its fourth-best day of 2024 after the U.S. government reported inflation at the wholesale level slowed last month by more than economists expected. The Dow Jones Industrial Average was up 378 points, or 1%, with roughly an hour remaining in trading, and the Nasdaq composite was 2.3% higher. High inflation has been the scourge of shoppers and financial markets for years. It finally looks to be slowing enough to get the Federal Reserve to ease up on high interest rates, which the Fed has been keeping at economy-crunching levels in order to stifle inflation. Treasury yields eased in the bond market following the inflation data, as traders remain convinced the Fed’s meeting next month will bring the first cut to interest rates since the COVID crash of 2020. The yield on the 10-year Treasury fell to 3.85% from 3.91% late Monday. All is still not clear, though. On Wednesday, the U.S. government will deliver the latest monthly update on inflation that U.S. consumers are feeling, which could be less encouraging. And on Thursday will come a report showing how much U.S. shoppers are spending at retailers. A growing worry on Wall Street is that the Fed may have kept interest rates too high for too long and undercut the U.S. economy by making it so expensive to borrow money. The economy is still growing, and many economists don’t expect a recession, but a sharp slowdown in U.S. hiring last month raised questions about its strength. Home Depot on Tuesday delivered stronger profit for the spring quarter than analysts expected, but it also said high interest rates and uncertainty about the economy are keeping some customers from spending on home improvement projects. The retail giant lowered its full-year forecasts for an important measure of sales and for profit, even though it topped expectations for the second quarter. Its stock rose 1.9% after flipping earlier between modest gains and losses. Elsewhere on Wall Street, Starbucks soared 21.9% after it convinced Brian Niccol to leave his job as CEO of Chipotle Mexican Grill to take over the coffee chain. He will start as chairman and chief executive next month and will replace Laxman Narasimhan, who is stepping down immediately. Chipotle, meanwhile, dropped 6.9%. Niccol has been its chief executive since 2018 and its chairman since 2020, and he helped its stock rise more than 240% over the last five years to tower over the S&P 500’s 85% gain. Chipotle said its chief operating officer, Scott Boatwright, would be interim CEO. In stock markets abroad, indexes were modestly higher across much of Europe and Asia. Japan’s Nikkei 225 was an outlier and jumped 3.4%. Japan’s market has been viciously volatile recently, including the worst drop for the Nikkei 225 since the Black Monday crash of 1987. It’s been swinging since a hike to interest rates by the Bank of Japan forced many hedge funds and other investors to abandon a popular trade all at once, where they had borrowed Japanese yen at cheap rates to invest elsewhere. The forced selling that followed the surge in the Japanese yen’s value reverberated around the world. But a promise last week by a top Bank of Japan official not to raise rates further as long as markets are “unstable” has helped calm the market. Another worry that’s made Wall Street so shaky over the last month is concerns that investors went overboard in their mania around artificial-intelligence technology and took the prices of Big Tech and AI-related companies too high. Nvidia, the company whose chips are powering much of the move into AI, has been at the center of the action. After soaring more than 170% through the year’s first six and a half months, it plunged more than 20% over the ensuing three weeks. On Tuesday, Nvidia rose 6.4% and was the strongest force pushing upward on the S&P 500. All the other stocks in the small group known as the “Magnificent Seven” also climbed. They almost singlehandedly pushed the S&P 500 to dozens of all-time highs earlier this year, even as high interest rates weighed on much of the rest of the stock market. Unlike much of the early part of this year, it wasn’t just the Magnificent Seven rising Tuesday. Wall Street’s rally was more widespread, and four out of every five stocks in the S&P 500 were rising. The smaller stocks in the Russell 2000 index were also up 1.3%. ___ AP Business Writer Yuri Kageyama contributed. 23-22
