Wall Street rallied Tuesday after a round of reports suggested the economy is in better shape than feared.
The S&P 500 rose 1.1% to resume an upward climb that had carried it earlier this month to its highest level in more than a year. The Dow Jones Industrial Average rose 212 points, or 0.6%, while the Nasdaq composite gained 1.6%.
Airlines helped lead the way after Delta Air Lines said it still sees pent-up demand in the pipeline as passengers make up for lost opportunities to travel during the pandemic. It highlighted high-income customers in particular, who account for three-quarters of spending on air travel and still look to be in good financial shape despite high inflation.
Delta’s stock took off by 6.8% after it said earnings this year should come in at the top end of the range it had earlier forecast. American Airlines climbed 5.5%, and United Airlines rose 5.1%.
Big tech stocks were also strong, continuing a big run this year spurred by excitement around artificial-intelligence technology. Nvidia, which has been at the center of the AI frenzy, rose 3.1% to vault its gain for the year so far to 186.5%.
High inflation is hurting other companies more directly, though. Walgreens Boots Alliance dropped 9.3% after it reported weaker profit for the latest quarter than analysts expected. The retail pharmacy company also cut its forecast for earnings this fiscal year, saying customers have become more cautious in their spending and are looking for more value amid high inflation.
Lordstown Motors sank 17.2% after the electric pickup truck company filed for Chapter 11 bankruptcy protection. It had warned in early May that it was in danger of failing due to a dispute with electronics company Foxconn, which was wavering on a $170 million investment in the startup company.
The U.S. stock market has been on a tear this year despite much higher interest rates meant to get inflation under control, in part because the economy has so far managed to avoid a recession. But many investors are just delaying their predictions for the start of a recession rather than cancelling them.
Reports on the economy Tuesday were largely stronger than expected. A reading on consumer confidence jumped to its highest level since the start of 2022, and orders for long-lasting manufactured goods unexpectedly grew, beating economists’ forecasts for a pullback.
16 May 2024
23 May 2024
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