WASHINGTON – Wall Street equities posted a solid rebound yesterday, recovering some ground after big losses earlier in the week, despite lacklustre economic data including disappointing retail sales.
While the major indices are still down for the week, good news on mask requirements offered more hope for the economic reopening and helped drive gains in travel shares.
The benchmark Dow Jones Industrial Average gained 1.1% to close at 34,382.13, while the broad-based S&P 500 rose 1.5% to 4,173.85.
The tech-rich Nasdaq Composite Index jumped 2.3% to finish the week at 13,429.98.
The three indices are nonetheless down by similar amounts for the week after three successive downbeat sessions beginning Monday caused by rising concerns about an inflationary spike.
Government data showed retail sales were flat last month after a surge in March, as shoppers took a break and sales in some sectors declined.
Meanwhile, supply chain bottlenecks hit United States industry, and manufacturing output posted a modest increase, held back by declining auto production amid a global semiconductor shortage.
The world’s largest economy has been on the upswing as widespread Covid-19 vaccinations allow businesses to reopen, and that got a boost after health authorities on Thursday eased mask requirements for people who are fully vaccinated.
Travel shares reacted to the news yesterday, with Carnival Cruise Line jumping 8.3% and competitor Royal Caribbean up 7.4%, while American Airlines gained 5.6%.
But, the University of Michigan consumer sentiment index fell more than six points to 82.8 in May amid increasing concerns about inflation, although Americans appear ready to continue to spend even as prices rise.
Quincy Krosby of Prudential Financial said the economy appears to be “opening at a faster clip” and the price gains that come with it may not be a problem.
“It seems as if the market is accepting that as long as it is also in concert with the economy doing better and corporate earnings doing better, it can withstand a little bit more inflation,” he told AFP.
But referring to the Federal Reserve’s repeated assurances that price spikes will not last, he said doubts remain.
“The biggest question is, what does transitory mean? What does temporary mean, and how much stickiness do we have?” – AFP, May 15, 2021
