Wall Street has extended its rally into a fifth straight day in a session of whipsaw trading as investors responded to mixed comments by US Federal Reserve chairman Jerome Powell, while a warning from Macy’s pummelled retail stocks.
Powell reiterated the views of other policymakers that the Fed would be patient about interest rate hikes. But major stock indexes temporarily moved into negative territory after Powell said the bank’s balance sheet would be “substantially smaller,” and after he raised concerns about the size of US debt.
The S&P 500 is up over 10 per cent from a 20-month low it touched around Christmas, lifted by hopes for a US-Chinese trade deal, which eased some worries over the impact of the dispute on global growth. The benchmark index’s five-day winning streak is its longest since September.
Trade-related optimism faded somewhat as China offered little in the way of details on key issues such as forced technology transfers, intellectual property rights, tariff barriers and cyberattacks. In the US, reports from Macy’s and American Airlines added to concerns that growth of corporate profits would slow.
Macy’s stock plunged nearly 18 per cent and pulled down other retailers after the department store operator cut its same-store sales forecast for the full year because of weak demand during mid-December.
S&P 500 companies on average are seen posting 14.5 per cent growth in earnings per share as they report December-quarter results over the next few weeks, according to IBES data. However, expectations for growth in 2019 are at 6.4 per cent, down from an expectation of 7.3 per cent on January 1.
The Dow Jones Industrial Average climbed 0.51 per cent to end at 24,001.92 points, while the S&P 500 gained 0.45 per cent to 2596.64. The Nasdaq Composite added 0.42 per cent to 6986.07.
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