After the chop-offs leading up to Thursday’s session, stocks stabilized and the main index climbed to the end. Focused on a large amount of economic data and many well-known revenue reports.
The June release of retail sales data by the Census Bureau was a marquee event on today’s economic calendar. The report showed a 0.6% increase in retail sales from May to June. This is far superior to the 0.9% decline seen in May, with an increase of 0.2% expected.
“Consumers are bent their consumer muscles again,” says Gina Volbin, president of Volbin Wealth Management Group.
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Today’s report, “It shows that American shoppers are alive. That’s important to the market,” adds Borubin. “Strong retail sales are like oxygen to the economy, and Wall Street is sighing for today’s relief.”
In fact, the Dow Jones industrial average rose 0.5% to 44,484. The S&P 500 rose 0.5% to 6,297, while the Nasdaq Composite added 0.7% to 20,884.
Also, what helped to lift the sentiment was weekly unemployment claims, better than expected at 221,000, the lowest level since April.
President Donald Trump is well known to prefer the Fed to begin cutting faster than late. But today’s strong economic data only raises hopes that central banks will be put on hold at policy meetings later this month.
According to CME Group’s FedWatch, futures traders are currently priced by central banks with a 97.4% chance, and at the next meeting, they are in the current range of 4.25% to 4.5% at the next meeting from 92.8% a week ago.
Pepsico, TSM leads post-earning acquisitions
On its revenue calendar, soft drink and snack maker PepsiCo (PEP) reported second-quarter revenue and revenues that exceeded expectations, repeating its full-year forecast.
The stock rose 7.5% in response, making PEP one of the best-performing S&P 500 shares of the day.
Taiwan Semiconductor Manufacturer (TSM) also went green after revenue, earning 3.4% as sizzling demand for artificial intelligence (AI) chips caused a 61% surge in quarterly profits.
The company also forecast revenue growth of 38% year-on-year for the third quarter, far surpassing analyst estimates.
“TSM is facing actual tariff impacts and potential tariff impacts,” says Jim Kelleher, research analyst at Argus, who adds that the company “could benefit from the recent melting between the US and China.”
Analysts hope for firm growth in the long term “as generative AI moves to the mainstream and demand for electronic devices will accelerate.”
Kelleher has a purchase rating for semiconductor inventory and a price target of $290, representing an implied 17% increase from the current level.
Starbucks stocks will be slapped at new selling ratings
Starbucks (SBUX) rose 0.7%, extending the rebound from Blue Chip stock’s May low. Stocks have now grown 16% on a total revenue basis (price changes and dividends) since May 9th, up almost 26% over the past 12 months.
But Jeffries analyst Andy Barish believes Starbucks was way too fast and too fast to downgrade and downgrade (sold) the coffee chain. Barish also has a $76 price target for SBux, nearly 18% below its current level.
“In our view, I think the stock exceeds reasonable expectations of improving the foundation,” Barish wrote to his client in a note, adding that credit and debit card data, as well as pedestrians, suggesting revenue estimates.
Analysts add that “complex people and operational issues can take longer than expected for management to make progress,” but large investments can place a greater emphasis on revenue.
This bearish view of Starbucks is relatively rare. Of the 35 analysts covering Sbux, tracked by S&P Global Market Intelligence, 10 say it’s a strong buy. It says it’s a selling point.
