Dow, S&P 500 build on records as a retail sales surprise fuels rate cut hopes

Live3 updates

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  Tue, July 16, 2024 at 9:35 AM EDT

  Dow, S&P 500 add onto records as stocks open higher

  US stocks moved higher on Tuesday, as investors assessed fresh big bank earnings and a surprise retail sales report — all while investors appear more and more confident that an interest rate cut is near.

  The Dow Jones Industrial Average (^DJI) rose roughly 0.5%, after the blue-chip index topped 40,000 to notch an all-time closing high. The S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) were each up more than 0.3% on the heels of their own daily wins.

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  Tue, July 16, 2024 at 9:07 AM EDT

  Retail sales come in better than expected in June

  Retail sales were flat in June, defying Wall Street’s prediction of a decline amid signs of slowing in the US economy.

  Economists had expected a 0.3% decline in spending, according to Bloomberg data. Meanwhile, retail sales in May were revised higher to an increase of 0.3%, from a prior reading of 0.1%, according to Census Bureau data.

  June sales, excluding auto and gas, grew by 0.8%, above consensus estimates for a 0.2% increase. The control group in Tuesday’s release — which excludes several volatile categories and factors into GDP for the quarter — rose 0.9% in June, above estimates for a 0.2% gain.

  “Although retail sales were unchanged in June, the strong 0.9% [month-over-month] rise in control group sales should ease concerns about the plight of the consumer in the wake of the renewed slump in sentiment,” Capital Economics chief North America economist Paul Ashworth wrote in a note to clients. “Admittedly, both second-quarter consumption and GDP growth still appear to have been no better than 2% annualised, but the strong gain in June does set up for a better third quarter performance.”

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  Tue, July 16, 2024 at 8:17 AM EDT

  The high expectations on Netflix

  Expectations on Netflix (NFLX) earnings later this week are on the high side, to say they very least. It makes sense as the company’s business has clearly kicked into a new gear the past two quarters.

  Even still, you have to wonder if expectations are TOO high and no matter what Netflix reports on Thursday, it will be seen as a letdown.

  An example of what I am talking about is Jefferies analyst James Heaney, with this line in his earnings preview report this morning:

  “We are raising our subscriber estimate for 2Q24 by ~18% to 5.8M net adds vs 4.9M previously and our fiscal year estimates to 28.3M.”