APRIL US DIFFERENT HOLIDAYS:
- April retail sales in the US rose 0.9%, in line with market expectations
- Strong consumer spending suggests that consumption remains stable despite rising inflation
- S&P 500 futures hold most of the pre-market gains as encouraging economic data alleviates worries that the U.S. economy is coming off a precipice
Retail sales in the U.S. increased at a healthy pace last month, easing concerns that rising price pressures and falling real incomes are starting to cut spending significantly. According to the Ministry of Trade, Preliminary monthly sales of retail and food services rose 0.9% according to the average forecast in a Bloomberg News poll. Picking up cars, the cost of retail purchases exceeded forecasts, increasing by 0.6% compared to consensus expectations of 0.4%.
Although some Wall Street analysts expected buyers to slow purchases due to limited personal finances, encouraging figures on Tuesday suggest that the US consumer remains resilient and still has gas aside to expand, partly fueled by a booming job market, some wage growth and accumulated savings during a pandemic.
After US gross domestic product fell 1.4%on an annualized basis over the first three months of the year, economists hastened to note that activity will bounce back in the short term amid little signs that the consumer is starting to crack. Today’s data confirms this assessment and adjusts the economy to a good start to the second quarter.
The futures of the S&P 500 made a profit immediately after the table of consumers crossed the wires, rising by about 1.4% to 4060 in the pre-market session. If household spending is on a solid footing, broader economic outlook remains positive, given that consumer spending accounts for about 70% of GDP. However, retail sales figures may help ease the extreme state of pessimism on Wall Street and growing concerns that the U.S. economy is heading into recession. These sentiments, in turn, can help stabilize risky assets by allowing the stock market to begin to recover.
S&P 500 E-MINI FUTURE (5-MINUTE CHARTER)
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— Written by Diego Coleman, market strategist for DailyFX