Wall Street continued its recovery from a seven-week losing streak on Thursday as investors seized on clear signs that the worst inflation in the sky may be over.
The Dow Jones Industrial Average rose 565 points, or 1.6%, to 32,647, and the Nasdaq was up 2.8% as of 1:30 p.m. Eastern local time.
The S&P 500, coming in from seven consecutive weekly losses, was its longest segment since 2001, up 2.1%.
Markets were buoyed by a strong set of quarterly results from Macy’s and other retailers.
Shares of smaller companies also made strong gains, indicating a revival in the economy. The Russell 2000 Index rose 2.5%.
Retailers led the broader market.
Macy’s rose 17.1% after raising its profit forecast for the year following strong first-quarter financials.
Dollar General jumped 13.1% and Dollar Tree 20.5% after discount retailers reported solid earnings and gave investors encouraging forecasts.
The retail sector is being watched closely by investors looking for more details on how much pain inflation is inflicting on companies and consumers.
Weak reports last week from several majors, including Target and Walmart, shook 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 as consumers and businesses continue to spend at a solid pace.
The Commerce Department estimated the economy contracted at a 1.5% annual pace from January to March, a revision slightly below its earlier estimate of 1.4% released last month.
It was the first decline in GDP since the second quarter of 2020 – in the depths of the COVID-19 recession – and after a strong 6.9% expansion in the last three months of 2021.
The nation is caught in the painful grip of high inflation, which has caused particularly severe hardships for low-income households, many of them people of color.
But the nonpartisan Congressional Budget Office released a report Wednesday indicating it expects GDP to grow by 3.1% in 2022.
The CBO report also predicts that rising inflation levels will cool by about 2% each month in 2024.
“In the CBO’s projections, the current economic expansion continues, and economic output accelerates next year,” the CBO said in its report.
“To meet increased demand for goods and services, businesses increase both investment and hiring, although supply disruptions hinder that growth in 2022.
post with wires