U.S. consumer spending rose steadily in July, suggesting the economy remains strong while prices are rising modestly.
“Investors are once again seeing signs of a soft landing,” said Cameron Dawson, chief investment officer at NewEdge Wealth. “This is one of those Goldilocks reports that really hits the middle of the needle – the market is getting exactly what it wanted.”
A “just right” Goldilocks economy is one that is growing steadily but not so much that it causes excessive inflation.
Amazon.com Inc. and Tesla Inc. each jumped more than 3 percent. Broadcom Inc. rose nearly 4 percent and chipmaker Marvell Technology Inc. jumped 9 percent after the company said it expected better-than-expected quarterly earnings. The personal consumption expenditures report was released Friday after Federal Reserve Chairman Jerome Powell signaled support for imminent policy adjustments last week. Next week’s economic data includes the Labor Department’s August jobs report, due on Friday.
In money markets, traders are primarily expecting the Fed to cut rates by 25 basis points in September, according to CME Group’s FedWatch tool, suggesting that a 50 basis point cut looks even less likely following Friday’s data.
A tumultuous month came to an end on Wall Street on Friday, as signs of a sudden slowdown in the labor market in early August raised fears of a U.S. recession. The selloff was exacerbated by the effects of the Japanese yen carry trade.
Stocks have recovered since then, with the S&P 500 trading near all-time highs.
U.S. stock markets are closed on Monday for Labor Day, but trading volume on U.S. exchanges was relatively light at 11.2 billion shares compared with an average of 11.4 billion shares over the past 20 sessions.
The S&P 500 rose 1.01% to close at 5,648.40 points.
The Nasdaq Composite Index rose 1.13% to 17,713.62 points, while the Dow Jones Industrial Average rose 0.55% to 41,563.08 points.
All 11 stocks in the S&P 500 sector index rose, with the consumer discretionary sector up 1.9% and the industrials sector up 1.1%.
For the month, the S&P 500 has risen 2.3%, the Dow has gained 1.8% and the Nasdaq has added 0.6%.
Nvidia rose 1.5%, rebounding from a 6.4% drop on Thursday after the artificial intelligence chip pioneer failed to meet investors’ sky-high expectations despite strong earnings and broadly in line with expectations.
Novavax shares jumped 8.6% after the U.S. Food and Drug Administration granted emergency use authorization for an improved version of the company’s COVID-19 vaccine.
Ulta Beauty shares fell 4 percent after the company cut its full-year earnings forecast, citing slowing demand for higher-priced makeup and fragrance products in its stores.
Intel shares rose about 10 percent after reports the company was considering options, including a merger.
Dell Technologies, another AI stock, rose 4.3% after it raised its full-year sales and profit forecasts.
Shares in Trump Media & Technology Group, majority-owned by former U.S. President Donald Trump, fell 1.7% to a record low, giving it a market capitalization of $3.9 billion.
Advancing stocks in the S&P 500 index outnumbered declining stocks by a 6.6-to-1 ratio.
The S&P 500 recorded 79 new highs and two new lows, while the Nasdaq recorded 84 new highs and 77 new lows.
