S&P500: Strong Retail Sales and 88% Earnings Beat Rate Drive Stock Market Rally

U.S. Stocks Rally as Retail Sales, Earnings, and Jobless Claims Boost Confidence

U.S. equities surged Thursday, powered by stronger-than-expected retail sales, resilient labor market data, and a wave of corporate earnings beats.

The Dow Jones Industrial Average gained 214 points (+0.5%), the S&P 500 rose 0.3%, and the Nasdaq Composite added 0.4%.

The rally followed Wednesday’s brief market dip, which was sparked by rumors—later denied—about President Trump potentially removing Fed Chair Jerome Powell.

Did Retail Sales Signal a Stronger Consumer?

June retail sales jumped 0.6%, triple the 0.2% forecast, and reversed May’s 0.9% drop. Even excluding autos, sales rose a solid 0.5%. Categories like clothing (+0.9%) and restaurants (+0.6%) showed notable strength. This performance points to a robust consumer sector that’s weathering inflation pressures and tariff concerns, providing a key pillar of support for the economy.

How Is the Labor Market Holding Up?

Initial jobless claims fell by 7,000 to 221,000 for the week ending July 12, reinforcing labor market strength. The data supports a soft landing view and suggests layoffs remain limited. This eases fears of a sharp slowdown and implies the Federal Reserve may not need to accelerate rate cuts as aggressively as previously expected.

Earnings Beats Fuel Broader Market Optimism

With around 50 S&P 500 firms reporting so far, 88% have topped analyst estimates. That high beat rate is bolstering investor sentiment and lending support to valuations. Notable gainers included United Airlines (+6%), PepsiCo (+5%), and Taiwan Semiconductor, which posted a 61% profit surge to $12.83 billion. Tech and consumer discretionary sectors led the advance, driven by strong performance from semiconductors and airlines.

Will the Fed Shift Its Rate-Cut Messaging?

Markets are closely watching today’s slate of Federal Reserve speakers, including Governor Waller and San Francisco Fed’s Mary Daly. With inflation still running at 2.7% and economic data surprising to the upside, traders are looking for clues on whether two quarter-point rate cuts this year remain on the table.

Market Outlook: Momentum Builds Ahead of Key Earnings

Thursday’s rally underscores the market’s ability to absorb strong economic data without fretting about reduced Fed support. With the Powell dismissal rumors fading, attention is squarely back on fundamentals.

Netflix earnings after the bell and further commentary from Fed officials could drive short-term sentiment.

If economic and earnings strength continues, the S&P 500 and Nasdaq appear positioned to extend gains into the heart of earnings season.

More Information in our Economic Calendar.