All three major US stock indexes closed in the green, with the blue-chip Dow Jones leading the way. However, the Nasdaq's gains were held back as shares of Nvidia, a leader in the artificial intelligence sector, slowed.
Nvidia shares fell 2.6%, while the Philadelphia Semiconductor Index edged up just 0.2%.
The Dow Jones Industrial Average rose 664.18 points, or 1.43%, to 47,112.45; the S&P 500 gained 60.77 points, or 0.91%, to 6,765.89; and the Nasdaq Composite added 153.59 points, or 0.67%, to 23,025.59.
Volume on US exchanges reached 16.68 billion shares, lower than the average of 19.78 billion shares over the last 20 sessions.
Although weaker-than-expected retail sales and declining consumer confidence raised concerns about the health of US consumers, strong results from some retailers helped the S&P 500 retail index gain 2%.
A slew of new economic data has been released – much of it supporting the view that the Federal Open Market Committee (FOMC) will cut its target interest rate by another 25 basis points at its upcoming meeting. However, these reports are considered “outdated” due to delays in release related to the recent government shutdown.
The US Commerce Department and Labor Department released September data on retail sales and the Producer Price Index (PPI), which showed consumer spending weakened and inflation continued to cool.
Newer data from the Conference Board showed consumer confidence fell more than expected, with short-term expectations down nearly 12%.
At the last meeting, Fed Chairman Jerome Powell almost said the Fed would pause at its next meeting due to lack of economic data. But then Fed officials spoke and the view shifted from 'do nothing in December' to 'need to cut in December because the labor market is seriously weak,' said Paul Nolte, chief market strategist at Murphy & Sylvest in Illinois.
Financial markets agree - now expecting an 84.7% chance of the Fed cutting rates in December, compared with 50.1% a week ago.
US Treasury Secretary Scott Bessent said President Donald Trump will likely announce a candidate to replace Powell before Christmas, with White House economic adviser Kevin Hassett considered the leading candidate.
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