Wall Street continued its recovery from a seven-week losing streak on Thursday as investors seized on apparent signs that the worst of sky-high inflation may be over.
The Dow Jones Industrial Average rose 565 points, or 1.6%, to 32,647 and the Nasdaq rose 2.8% as of 1:30 p.m. Eastern local time.
The S&P 500, which is coming off seven straight weekly losses, its longest such stretch since 2001, was up 2.1%.
The market was galvanized by a strong set of quarterly results from Macy’s and other retailers.
Smaller company stocks also made strong gains, a sign of bullishness on the economy. The Russell 2000 index rose 2.5%.
Retailers led the broader market higher.
Macy’s surged 17.1% after it raised its profit forecast for the year following a strong first-quarter financial report.
Dollar General surged 13.1% and Dollar Tree jumped 20.5% after the discount retailers reported solid earnings and gave investors encouraging forecasts.
The retail sector is being closely watched by investors looking for more details on just how much pain inflation is inflicting on companies and consumers.
Weak reports from the several big companies last week, including Target and Walmart, spooked an already volatile market.
Earlier on Thursday, the federal government released data indicating that the US economy shrank in the first three months of the year even though consumers and businesses kept spending at a solid pace.
The Commerce Department estimated that the economy contracted at a 1.5% annual pace from January through March, a slight downward revision from its first estimate of 1.4%, which it issued last month.
It was the first drop in GDP since the second quarter of 2020 — in the depths of the COVID-19 recession — and followed a robust 6.9% expansion in the final three months of 2021.
The nation remains stuck in the painful grip of high inflation, which has caused particularly severe hardships for lower-income households, many of them people of color.
But the nonpartisan Congressional Budget Office released a report on Wednesday indicating that it expects the gross domestic product to grow 3.1% in 2022.
The CBO report also predicted that soaring levels of inflation will cool each month to around 2% by some point in 2024.
“In CBO’s projections, the current economic expansion continues, and economic output grows rapidly over the next year,” the CBO said in its report.
“To fulfill the elevated demand for goods and services, businesses increase both investment and hiring, although supply disruptions hinder that growth in 2022.
With Post wires
[Written in collaboration with other media outlets with information from the following sources]
