Stocks started Thursday on a quiet note, but then jolted higher as investors digested global central bank news and a busy day of U.S. economic data that included stronger-than-expected retail sales figures.
Following yesterday's pause on rate hikes from the Federal Reserve, the European Central Bank (ECB) overnight raised interest rates by a quarter-percentage point. Additionally, ECB President Christine Lagarde said the central bank is "very likely" to lift rates again at its July meeting.
"Yesterday's rate projection and economic outlook from the Federal Reserve and today's European Central Bank actions illustrate that monetary policymakers believe additional hawkish actions are still needed to curtail moderating but still high inflation," says José Torres, senior economist at Interactive Brokers.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Retail sales headline busy data day
Meanwhile, amid a jam-packed economic calendar, data from the Census Bureau showed retail sales rose 0.3% month-over-month in May. While this was slower than April's 0.4% increase, it exceeded economists' estimates. Also in focus was a pair of regional manufacturing reports that showed stabilizing factory activity in both New York and Philadelphia, as well as a flat reading on weekly jobless claims.
"With this week being the second consecutive week of high unemployment claims, investors are betting that the Fed isn't going to keep raising rates, as market bulls push equities to the highest level since April of last year," Torres adds.
Indeed, the Nasdaq Composite jumped 1.2% to 13,782, the S&P 500 soared 1.2% to 4,425 and the Dow Jones Industrial Average rose +1.3% to 34,408.
Today's broad-based rally was paced by big gains in the communications services (+1.6%) and technology (+1.3%) sectors, with AI stocks in particular seeing outsized returns. Among the most notable movers were Microsoft (MSFT, +3.2%) and Adobe (ADBE, +2.4%), which have each rallied almost 50% for the year-to-date.
Cava Group IPO sizzles
Another notable winner today was Cava Group (CAVA), which jumped 99% in its trading debut on the New York Stock Exchange (NYSE). The Mediterranean-restaurant chain on Wednesday priced its much-anticipated initial public offering (IPO) at $22 per share, up from the $17 to $19 range it projected earlier this week. Shares opened Thursday at $42.
This is one of the first big names to go public after a nearly two-year IPO drought "driven by the bear market, higher interest rates and overall negative investor sentiment," says David Trainer, CEO of investment research firm New Constructs. "The recent stock market strength may be increasing investor appetite for a new IPO." (Check out Kiplinger's list of the hottest upcoming IPOs to look out for this year.) However, Trainer adds that investors should be wary of new publicly traded companies like CAVA that are "unprofitable with sky-high valuations."
Related Content
-
Retirees: Is Your Local Bank Closing? Four Ways to CopeBank branches are closing across the country. If you are among the retirees who prefer to bank in person, you have some options.
-
Why Understanding Capital Gains Taxes Is Critical When Selling InvestmentsFailing to plan for taxes can eat into your profits and leave you with far less than expected when you finally cash in on an investment.
-
Stock Market Today: Dow Rises 854 Points From Its Intraday LowIf there's one thing markets hate, it's uncertainty. But uncertainty is all they're getting these days.
-
Microsoft Stock: Innovation Spurs Its 100,000% ReturnMicrosoft's ability to recognize the "next big thing" has allowed sales – and its share price – to grow exponentially over the years.
-
Stock Market Today: Stocks Skid Into Another Risk-Off TurnThe promise of the AI revolution can't overcome flickering hopes for a "Fed put."
-
CoreWeave IPO: Should You Buy CRWV Stock?The CoreWeave IPO was the biggest public offering of the year so far, with the AI cloud company making its market debut on Friday, March 28.
-
Stock Market Today: Dow Jumps 674 Points in Friday's Relief RallyThe gains weren't limited to stocks, though, with gold futures closing above the $3,000 per ounce mark for the first time.
-
Stock Market Today: Stocks Drop on Trump's EU Tariff ThreatsThe White House said alcohol imports from the European Union could soon face tariffs of 200%.
-
Should You Sell Tesla Stock as Elon Unrest Grows?Tesla's CEO is wearing many hats and is managing them "with great difficulty."
-
Adobe Stock's Path to a 100,000% Return Is ImpressiveA little bit of luck and a lot of strategic decision-making has created a massive return for Adobe shareholders.
