S&P 500 rides tech rally higher as consumer strength soothes recession fears
By Yasin Ebrahim
Investing.com -- The S&P 500 jumped Wednesday, underpinned by dip-buying in tech and data showing the consumer remains upbeat about the economy.
The S&P 500 rose 1.6%, the Dow Jones Industrial Average gained 1.6%, or 520 points, the Nasdaq Composite was up 1.8%
Beaten-down tech stocks were snapped up as the climb in Treasury yields cooled data showed that consumer confidence rose more than expected.
The Conference Board’s consumer confidence gauge jumped to 108.3 from 101.4, beating economists’ forecast for a reading of 101.0.
Data showing a strong consumer sentiment, a key indicator of consumer spending, which drives the bulk of economic growth, eased fears about a recession.
“Consumer expectations for any potential deterioration in the labor market, more modest expectations for wage gains, and concern about a recession have seemingly retreated,” Jefferies said in a note.
Regional banking stocks drove financial higher, with Lincoln National Corporation (NYSE: LNC), Zions Bancorporation (NASDAQ: ZION) and Comerica Inc (NYSE: CMA) leading to the upside.
The earnings front also pointed to a stronger consumer as Nike (NYSE: NKE) delivered blowout quarterly results and upbeat guidance that suggests the sportswear giant has trimmed its bloated inventory levels. Its stock jumped 13%.
“Nike made progress moving through excess inventory in the region [North America] and ended 2Q with inventory up 54% year-on-year vs. 65% at the end of 1Q,” Deutsche Bank said in a note.
FedEx Corporation (NYSE: FDX) also reported better-than-expected quarterly results and announced plans to cut a further $1 billion in costs, estimating total savings for fiscal 2023 of $3.7B from a prior estimate of $2.7B.
Rite Aid Corporation (NYSE: RAD), however, bucked the trend, falling more than 16% as the pharmacy operator’s cut to full-year guidance offset a narrower quarterly loss.
Housing stocks held onto gains despite fresh signs of weakness in the housing sector.
U.S. existing home sales slipped 7.7% in November to 4.09 million, the lowest since May 2020.
PulteGroup Inc (NYSE: PHM), Toll Brothers Inc (NYSE: TOL), and DR Horton Inc (NYSE: DHI) were up more than 2%.