US stocks edge up as investors assess rate hike risks

NEW YORK: Wall Street stocks rebounded slightly early on Thursday, following positive earnings results by major retailer Walmart and as markets weigh the chances of more interest rate hikes.

The Dow Jones Industrial Average ticked up 0.3 percent to 34,866.04 shortly after trading began.

The broad-based S&P 500 climbed 0.3 percent as well to 4,416.65, while the tech-rich Nasdaq Composite Index advanced 0.2 percent to 13,505.98.

Wall St falls as retail sales data fans rate fears

The movements came after Walmart lifted its full-year forecast on a jump in quarterly profits – seeing solid increases at US stores and in e-commerce.

Networking equipment giant Cisco Systems also earlier beat expectations with its earnings report.

But markets are struggling to bounce back amid concerns of further interest rate hikes, after minutes of the Federal Reserve’s recent policy-setting meeting reflected risks of more tightening.

“Now that we heard from Walmart, it is clear that the US consumer is still willing to spend,” said Edward Moya of OANDA.

With robust consumer spending expected in the third quarter this year, “that should keep growth estimates trending higher,” he added in a note.

Consumers are still drawing down on their savings accumulated during the pandemic, while there is “a lag with how student debt repayments go,” meaning that confidence in continued business momentum should remain, Moya said.

This also means the Fed could maintain its hawkish stance that officials may need to do more tightening to fight inflation.

Stocks sold off late Wednesday as the yield on the 10-year US Treasury note hit its highest level since 2008, noted Patrick O’Hare of Briefing.com.

Treasury yields, which are a proxy for interest rates, were already rising before the Fed meeting minutes were released, O’Hare said, suggesting that other forces helped drive them higher.

These include “ruminations that perhaps yields should be higher considering the US economy still has some legs under it – a point borne out by an Atlanta Fed GDPNow model calling for 5.8 percent real GDP growth in the third quarter.”