Deep discounters Dollar Tree Inc and Dollar General Corp posted their biggest rallies on record amid stronger sales forecasts.
Of Bloomberg
Released May 26, 2022
Stocks continued to recover from their lowest levels in over a year as solid retailer prospects boosted confidence in the economy despite supply chain difficulties and inflationary pressures.
A drop in US mortgage rates by the sharpest rate since April 2020 and Broadcom Inc.’s $61 billion acquisition of VMware Inc. also fueled risk appetite. Consumer stocks led gains in the S&P 500 as Macy’s Inc. raised its earnings forecast, while discounters Dollar Tree Inc. and Dollar General Corp. posted their biggest rallies on record amid stronger sales forecasts. Southwest Airlines Co. and JetBlue Airways Group Inc. rose on upbeat revenue estimates. Megacaps Apple Inc. and Tesla Inc. helped push the Nasdaq 100 up almost 3%.
Strong views from retailers brought some relief to investors after giants Walmart Inc. and Target Corp. lowered their forecasts last week, triggering a sell-off in the industry. According to a report by the Federal Reserve Bank of New York, US consumers still largely expect that the inflation shock will be temporary and that long-term exchange rate gains will be low and stable.
“While this was an anticipated and much-discussed potential ‘oversold’ rally, the underpinning of today’s market advance suggests that last week’s doom and gloom over the all-important US consumer may have been exaggerated,” said Quincy Krosby, Chief Equity Strategist at LPL Financial.
Here are some important events to watch this week:
- US Core PCE Price Index; personal income and expenses; wholesale stocks; Consumer sentiment at the University of Michigan on Friday
Some of the key movements in the markets:
stocks
- The S&P 500 was up 2% as of 4 p.m. New York time
- The Nasdaq 100 rose 2.8%
- The Dow Jones Industrial Average rose 1.6%
- MSCI World Index up 1.5%
currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.4% to $1.0724
- The British pound rose 0.2% to $1.2599
- The Japanese yen rose 0.2% to 127.09 per dollar
Bind
- The 10-year government bond yield was little changed at 2.75%.
- The 10-year German government bond yield rose five basis points to 1.00%
- The 10-year UK government bond yield rose 6 basis points to 1.97%
raw materials
- West Texas Intermediate crude rose 3.2% to $113.90 a barrel
- Gold futures were up 0.2% to $1,856.20 an ounce
–With support from Andreea Papuc, Vildana Hajric and Isabelle Lee.
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