NEW YORK (AP) — U.S. stocks are hovering around their all-time highs on Tuesday after signs emerged that the economy’s growth might be slowing, but not plummeting as feared.
The S&P 500 edged up by 0.2% after hitting a record for the 30th time this year. The Dow Jones Industrial Average rose by 85 points, or 0.2%, as of 9:50 a.m. Eastern time, while the Nasdaq composite slipped by 0.1%.
The market received a boost from declining bond yields. Treasury yields fell following a report showing an increase in sales at U.S. retailers last month, although still below economists’ projections.
This could signal positive news for the Federal Reserve, which is working to manage the economy through a delicate balance. The Fed aims to slow down the economy just enough through higher interest rates to control inflation. The goal is to reduce its main rate, which is currently at its highest level in two decades, in a timely manner to prevent a severe recession.
After the release of retail sales data, traders are increasingly betting that the Federal Reserve will cut rates at least once this year, possibly twice, according to CME Group data. Fed officials themselves are envisioning one or two rate cuts in 2024.
The 10-year Treasury yield dropped to 4.24% from 4.29% on Monday. The two-year yield, which closely reflects expectations for the Fed, fell even further to 4.71% from 4.77%.
However, Tuesday’s weaker-than-expected data could also indicate a weakening of the main driver of the U.S. economy—household spending.
Inflation remains high, though it has slowed from its peak, and lower-income households are particularly struggling to cope with rising prices.
Homebuilder Lennar saw a 1.9% decline in its stock after co-CEO Stuart Miller mentioned challenges with consumer sentiment and interest rate fluctuations. Despite reporting better quarterly profits than analysts predicted, its stock fell.
Electric-vehicle maker Fisker’s shares plummeted by nearly 60% to 2 cents after filing for Chapter 11 bankruptcy protection, citing market and macroeconomic challenges.
On a positive note, La-Z-Boy experienced a 19.9% surge after reporting stronger-than-expected profit and revenue for the latest quarter and a solid start to the current quarter. Furniture maker Silk Road Medical also jumped by 23.7% following Boston Scientific’s agreement to acquire the company for approximately $1.26 billion.
Overseas, European markets continued to recover from last week’s decline, with France’s CAC 40 rising by 0.7%. In Asia, Japan’s Nikkei 225 climbed 1%, with Toyota Motor’s stock gaining ground after shareholders rejected a proposal to oust Akio Toyoda as chairman of the board.
AP Business Writer Elaine Kurtenbach contributed.
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