Markets

Close Update: Stocks Rally as Economic Data Cools Rate Hike Jitters

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Stocks rallied on Thursday when an unexpected drop in retail sales and anemic inflation data dimmed the likelihood for the Fed to hike rates next week.

Amplified by a rebound in oil and strong technical support for the S&P 500 at 2,120, the benchmark indices were all at least 1.0% higher on gains in the technology and healthcare sectors. All ten S&P 500 sectors and 30 component stocks of the Dow closed in the green with Apple ( AAPL ) leading advancers. The tech giant had its best four-day run since 2014 from better-than-expected iPhone 7 preorders. Coupled with sizable gains in the biotech sector, the Nasdaq Composite outperformed, rising to its highest level in five days and closed the gap between the low from September 8 and the high on September 9.

Wall Street was buoyant ahead of the data-dump this morning after the Bank of England voted against another rate cut this month, but indicated that another easing was likely before the end of the year. European shares traded higher with the UK's FTSE-100 outpacing its Euro-zone counterparts.

Into the U.S. open, investors braced for the possibility that bullish retail sales and wholesale price data could convince the Fed to tighten next week. Instead, the bulk of the data was on the soft side, including industrial production and capacity utilization which added to downward revisions to Q3 growth forecasts.

To recap today's data: initial jobless claims increased by just 1,000 to 260,000 versus estimates for a gain of 6,000 to 265,000; the nominal PPI was unchanged but the core was up 0.1% compared to estimates for both to increase 0.1%; August retail sales fell 0.3% and were down 0.1% excluding auto and gas sales, missing Wall Street estimates to be unchanged at up 0.4%, respectively; the September Philadelphia Fed business outlook index shot up to 12.8 from 2.0, while the September Empire State manufacturing index improved to -1.99 from -4.21 previously; the current account deficit narrowed to $119.9 billion in the second quarter from a revised $131.8 billion deficit; industrial production fell 0.4% in August, twice as bad as what the street expected, while capacity utilization slowed to 75.5% from 75.9%; and finally, business inventories were unchanged, missing expectations for a small gain of 0.1%.

Friday's data includes the August consumer price index (nominal +0.1% and core +0.2%) and the University of Michigan preliminary September consumer sentiment index (90.8 vs 89.8 previously). Tomorrow is also quadruple witching in which stock futures, index futures, stock options and index options all expire.

Here's where the markets stood at the close:

US MARKETS

Dow Jones Industrial Index was up 177.71 (+0.99%)

S&P 500 was up 21.49 points (+1.01%)

Nasdaq Composite Index was up 75.92 points (+1.47%)

GLOBAL SENTIMENT

FTSE 100 was up 0.85%

Nikkei 225 was down 1.26%

Hang Seng Index was up 0.63%

Shanghai China Composite Index was down 0.68%

UPSIDE MOVERS

(+) AERI (+44.87%) Phase 3 study of Roclatan met primary efficacy endpoint

(+) CLBS (+15.44%) Announced a deal to raise $25 million in common equity priced at market without warrants

(+) ACRX (+9.76%) ARX-04 provided solid tolerance level in phase 3 trial

DOWNSIDE MOVERS

(-) UUUU (-25.55%) Announced $10 million bought-deal offering of units

(-) SQNS (-10.00%) Priced an offering of 15.2 million shares at $1.65 per ADS

(-) SBLK (-6.00%) Reports wider-than-expected Q2 loss, announced $51.5 million stock offering

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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