U.S. stocks rise as Federal Reserve commentary provides insight into future plans

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19th June 2024 – (New York) U.S. stocks closed higher on Tuesday, with a flurry of commentary from Federal Reserve officials shedding light on the upcoming plans of the Federal Open Market Committee (FOMC).

The Dow Jones Industrial Average climbed 56.76 points, or 0.15 per cent, reaching 38,834.86. The S&P 500 set a new record high, adding 13.80 points, or 0.25 per cent, to close at 5,487.03. The Nasdaq Composite Index eked out a 0.03 per cent gain, rising by 5.21 points to 17,862.23, securing its seventh consecutive record close.

Of the 11 primary S&P 500 sectors, eight ended the day in positive territory. Financials and technology stocks led the gainers, rising by 0.64 per cent and 0.61 per cent, respectively. However, communication services and consumer discretionary sectors experienced declines of 0.77 per cent and 0.42 per cent, respectively, leading the laggards.

In May, U.S. retail sales showed a slight increase, as reported by the U.S. Commerce Department. The value of retail purchases, not adjusted for inflation, rose by 0.1 per cent, following a revised 0.2 per cent decrease in April. Excluding gasoline, sales climbed by 0.3 per cent. Notable factors contributing to these results were lower gasoline prices and Memorial Day discounts at furniture stores.

Paul Ashworth, chief North America economist at Capital Economics, commented on the retail sales data, saying, “With services consumption growth slowing in recent months and consumer confidence plummeting again, maybe households aren’t quite as impervious to higher interest rates as we were beginning to believe.”

Federal Reserve officials made several public statements on Tuesday, providing insight into their views on monetary policy. Federal Reserve Governor Adriana Kugler expressed optimism about slowing price growth but cautioned that a single month of positive inflation data might not be sufficient to warrant interest rate cuts.

Boston Fed President Susan Collins emphasized a patient approach to monetary policy, citing a resilient economy and persistent inflation. Collins stated, “I see recent information as encouraging after the string of higher-than-expected inflation readings during the first quarter of 2024.”

Richmond Fed President Thomas Barkin echoed this sentiment, highlighting the need for sustained progress toward the Fed’s 2 per cent inflation target before considering any changes to interest rates.

In the corporate realm, chipmaker Nvidia surpassed Microsoft in market capitalisation for the first time, solidifying its position as the most valuable publicly listed company in the United States.