US open: Stocks go green following losses in previous session
Wall Street trading began on a positive note on Thursday following losses that came in the previous session after a somewhat hawkish update from the Federal Reserve.
At 1540 BST, the Dow Jones Industrial Average was up 0.16% to 25,240.74, while the S&P 500 picked up 0.32% to 2,784.62 and the Nasdaq grew 0.73% to 7,751.75.
Investors were still digesting a 25 basis points rate hike from the Fed on Wednesday. The increase, which was the second this year, was as expected. The central bank also upgraded its forecasts for this year and the next and said it expects to deliver another two rate hikes this year and another three next year. Markets had been pricing in three moves on rates this year.
Chris Beauchamp, chief market analyst at IG, said: "Four rate hikes for 2018 does not necessarily suggest that the end of the great bull market is at hand, but it has been enough to knock equities back this morning. After years of stasis in central banks, the developments are coming positively thick and fast. Jerome Powell’s Fed is clearly happy with the situation, feeling confident enough to knock the pace up a notch, and later today we will see if the ECB are in the mood to make a few changes too."
Also on investors minds was news that the European Central Bank had decided to end its asset purchase programme at the end of 2018, but confirmed that interest rates would remain at their current levels - at least - until September 2019.
The ECB's decision to wind-up the APP had been widely anticipated, following a recent speech by its chief economist, but the forward guidance on the first rate hike was more dovish than most economists had forecast.
In corporate news, 21st Century Fox picked up 1.40% at the open after Comcast made a $65bn bid for its entertainment and international assets.
Tailored Brands tumbled 23.69% after its first-quarter results late on Wednesday fell short of expectations.
On the data front, retail sales figures for May revealed that US consumers took Main Street by storm with sharp increases seen in outlays on building materials, gasoline and clothing.
Indeed, even department store sales increased, said Mickey Levy at Berenberg Capiatol Markets, who also flagged up somewhat "upside" risks to his forecast for second quarter US GDP.
Total retail sales volumes jumped by 0.8% month-on-month in April to reach $501,971bn, according to the Department of Commerce, and the so-called 'control group' of US retail sales, which excludes those of automobiles and gasoline, also outpaced forecasts, growing by 0.8% versus March (consensus: 0.3%).
Economists had forecast a print of just 0.4%.
Following Thursday's data, Barclays's tracking estimate for second quarter US GDP rose from 3.0% to 3.5%.
Import prices, released alongside retail sales, jumped last month, pushed higher by a sharp increase in the bill for fuel imports.
Total US import prices rose by 0.6% month-on-month in May, beating the 0.5% month-on-month increase forecast by economists, according to the Bureau of Labor Statistics. Versus a year ago, import prices rose 4.3%.
Initial jobless claims, meanwhile, unexpectedly fell last week and the number of Americans on jobless rolls declined to a near 44-year low, indicating a rapidly tightening labor market.
Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 218,000, the Labor Department said. Claims data for the week before was unrevised.
Economists had forecast claims rising to 224,000.
Lastly, US business inventories rebounded in April, however, a slight downward revision to retail stocks implied that inventory investment's contribution to economic growth across the second-quarter could be limited.
The Commerce Department said on Thursday that business inventories rose 0.3% after slipping 0.1% in March.