Stocks traded higher Friday as U.S. retail sales rose more than expected and investors assessed Federal Reserve Chairman Jerome Powell’s repeated assurances that rising price pressures will only be temporary.
Retail sales in the U.S. during June rose unexpectedly, jumping 0.6% when economists were calling for a decline of 0.3%. The data from the Commerce Department suggested employment gains and rising vaccination rates were offsetting inflation concerns in the world’s biggest economy.
“The unexpected rise in retail sales combined with (Thursday’s) pandemic-era low of jobless claims are two more strong proof points that we are edging closer to a full economic recovery,” said Mike Loewengart, managing director of investment strategy at E*Trade. “While we are seeing consumers broadly look more towards services and activities, the expectations that people would be turning away from goods seems to have been a little overblown.”
The Dow Jones Industrial Average gained 59 points, or 0.17%, to 35,046, the S&P 500 was up 0.33% and the Nasdaq rose 0.5%.
The yield on the benchmark 10-year Treasury rose Friday to 1.325%, trimming its third weekly decline.
Stocks finished Thursday’s session mostly lower following comments from Powell that the inflation surge the U.S. was experiencing as it recovers from the pandemic will ease or reverse over time.
He told lawmakers in a second day of testimony that this “particular inflation is just unique in history.
“We don’t have another example of the last time we reopened a $20 trillion economy. We’re humble about what we understand,” the Fed chief said Thursday before the Senate Banking, Housing and Urban Affairs Committee.
Optimism about the economic recovery, however, has been tempered this week by concerns growth could stall as variants of the COVID-19 virus spread.
Treasury Secretary Janet Yellen cautioned late Thursday in an interview with CNBC that she was concerned with the ongoing rise in delta-variant coronavirus infections in major economies around the world. Yellen also said the U.S. could see “several more months of rapid inflation” before price pressures ease into the start of next year.
Intel (INTC) – Get Report rose Friday following a report that said it was exploring an acquisition of GlobalFoundries that would boost the semiconductor company’s plans to make more chips for other tech companies.
The acquisition could be valued at $30 billion and would rank as Intel’s largest acquisition ever, according to The Wall Street Journal.