U.S. stocks rose on Tuesday as a stronger-than-expected retail sales report helped allay fears of a sharp economic slowdown ahead of the U.S. Federal Reserve’s latest policy-making meeting.
At 09:35 ET (13:35 GMT), the Dow Jones industrial average was up 93 points, or 0.2%, the S&P 500 gained 26 points, or 0.5%, and the NASDAQ Composite climbed 135 points, or 0.8 %.
Unexpected increase in retail sales in August
Data released earlier on Tuesday showed US retail sales rose 0.1% in August on a month-on-month basis, better than an expected 0.2% decline, after rising a revised 1.1% the previous month.
The number helped reassure investors that the consumer remains relatively healthy, which could prevent a sharp economic slowdown given the importance of the retail sector to the US economy.
The economic news comes as the Federal Reserve begins its two-day policy-setting meeting, which is expected to result in a rate cut when it concludes on Wednesday.
Traders saw pricing in a 68% chance of a 50bp decline. and a 32% chance of a 25 bp decrease, as shown by CME Fedwatch.
Uncertainty about the scale of the cut had caused some volatility on Wall Street in recent sessions, although both the S&P 500 and the Dow Jones Industrial Average remained near record highs.
Fed Chairman Jerome Powell’s comments at the end of the Fed’s two-day meeting will be closely watched as investors look for guidance on the likely extent of the easing cycle that could bring more rate cuts in the coming months.
Intel rise due to foundry plans
In the corporate sector, Intel (NASDAQ:INTC) rallied more than 3% after the chipmaker announced plans to spin off its foundry business and sell part of its stake in Altera.
The plan will see Intel turn its foundry business into a unit with its own board and will also allow the cash-burning unit to raise capital from outside investors.
The move comes just a month after Intel posted big stock losses due to disappointing quarterly earnings.
Intel also announced a deal to make a custom chip for Amazon’s ( NASDAQ:AMZN ) online services unit.
Shares of Microsoft ( NASDAQ:MSFT ) rose 1.7% after the software giant announced a $60 billion share buyback program while also raising its quarterly dividend by 10%.
Slow restrained in view of the API elements
Crude prices edged higher on Tuesday, continuing to build on earlier gains caused by the U.S. production shutdown after Hurricane Francine, ahead of the latest data on the country’s crude inventories.
By 09:35 GMT, Brent was up 0.1% at $72.80 a barrel, while U.S. crude (WTI) futures were trading 0.2% higher at $69.18 a barrel .
Both contracts were higher on Monday in the wake of the latest hurricane to hit the crude-producing region of the Gulf of Mexico and as traders awaited the start of the easing cycle by the US Federal Reserve.
More than 12 percent of crude production and 16 percent of natural gas production in the U.S. Gulf of Mexico remained offline, the U.S. Environmental Protection and Safety Office said Monday.
The American Petroleum Institute is due to release weekly inventory data later in the session, ahead of Wednesday’s official data, and traders expect a further draw in US crude stockpiles.
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Written by D Fernando
