By Stephen Culp
(Reuters) - Wall Street closed sharply higher on Thursday after optimistic retail earnings outlooks and waning concerns about overly aggressive interest rate hikes by the Federal Reserve put investors in a buying mood.
All three major U.S. stock indexes posted solid gains, with economically sensitive consumer discretionary and microchip stocks beating the broader market.
The tech-laden Nasdaq surged the most - its 2.7% advance was powered by gains in Apple Inc (NASDAQ:AAPL), Tesla Inc (NASDAQ:TSLA) and Amazon.com Inc (NASDAQ:AMZN).
On a weekly basis, the S&P 500, Nasdaq and Dow are on track to snap their longest losing streaks in decades, during which the benchmark S&P plummeted 14.1% and brought it within striking distance of being confirmed as a bear market.
At current levels, all three indexes are poised to notch their biggest weekly gains since mid-March.
"With first quarter earnings essentially over and coming in better than expected, combined with the Fed indicating that they are going to be front-end loading its rate-tightening policy and implying it may pause later in the fall, all of that has given investors reason to feel optimistic," said Sam Stovall, chief investment strategist at CFRA Research in New York.
Upbeat guidance from retailers appeared to offset dour warnings from their peers in recent weeks.
Department store operator Macy's Inc (NYSE:M) jumped 19.3% after raising its annual profit forecast.
Discount chains Dollar General Corp (NYSE:DG) and Dollar Tree (NASDAQ:DLTR) advanced by 13.7% and 21.9%, respectively, following their annual sales forecast hikes, suggesting consumers are shopping for less costly goods amid decades-high inflation.
The minutes from the Federal Open Market Committee's (FOMC) most recent monetary policy meeting calmed fears that the U.S. central bank could turn more hawkish, a concern which has fed into market volatility in recent weeks.
"We have had 65% more daily price moves of 1% or more than the average since WW2," Stovall said.
"If the Fed is too aggressive, they'll choke off inflation but also choke off economic growth," he added. "It's like in the winter you want to tap your brakes, not slam on them, to maintain control and avoid spinning out."
Economic data released on Thursday, including jobless claims, pending home sales and GDP, brought good news wrapped in bad, suggesting the economy is showing just enough softness to prompt a dovish pivot from the Fed by autumn.
The Dow Jones Industrial Average rose 516.91 points, or 1.61%, to 32,637.19; the S&P 500 gained 79.11 points, or 1.99%, to 4,057.84; and the Nasdaq Composite added 305.91 points, or 2.68%, to 11,740.65.
Of the 11 major indexes in the S&P 500, all but real estate ended the session up. Consumer discretionary led the gainers, rising 4.8%, with tech and financials placing and showing at 2.5% and 2.3%, respectively.
Shares of Twitter Inc (NYSE:TWTR) jumped 6.4% on news that the social media company is suing billionaire Elon Musk for delayed disclosure of his stake in the company.
U.S.-listed shares of Alibaba (NYSE:BABA) Group rose 14.8% after the Chinese e-commerce company beat estimates, even as it declined to provide forward guidance in view of COVID-19 restrictions in China.
Advancing issues outnumbered declining ones on the NYSE by a 5.16-to-1 ratio; on Nasdaq, a 2.95-to-1 ratio favored advancers.
The S&P 500 posted three new 52-week highs and 29 new lows; the Nasdaq Composite recorded 28 new highs and 116 new lows.
Volume on U.S. exchanges was 11.43 billion shares, compared with the 13.22 billion average over the last 20 trading days.