Dow, S&P 500 Hit Record Highs Amid Strong Retail Sales and Inflation Hopes

The S&P 500 and Dow Jones Industrial Average surged to new record highs at the close of last week’s trading, fueled by robust retail sales data that underscored a resilient consumer. This momentum positioned Wall Street for a significant weekly gain, even as inflation concerns lingered.

On Friday, the S&P 500 saw a slight dip of 0.2%, while the Dow advanced 135 points, or 0.3%. A notable boost for the Dow came from UnitedHealth, which soared 10% after investment titans Warren Buffett’s Berkshire Hathaway and Michael Burry’s Scion Asset Management disclosed new stakes in the insurance giant during the second quarter. The Nasdaq Composite, however, recorded a modest decline of 0.3%.

July’s retail sales figures, released Friday morning, painted a healthy picture for U.S. consumer spending, rising 0.5% and meeting Dow Jones expectations. Excluding automobiles, retail sales also matched estimates with a 0.3% gain.

For the week, all major averages posted solid gains. The Dow led the pack, up 2%, while the S&P 500 and Nasdaq each climbed over 1%, largely on the back of new consumer inflation data that reignited hopes for a Federal Reserve rate cut in September. However, these expectations faced a setback Thursday following a hotter-than-anticipated wholesale inflation report. Despite initial market jitters, stocks largely recovered, with the S&P 500 managing to clinch a fresh record closing high.

Market strategists, like Tom Lee of Fundstrat Global Advisors, suggested that a single data point is unlikely to alter the overall inflation trajectory thesis, maintaining a base case that current inflationary pressures will be viewed as transitory by the market. In corporate news, Intel gained 3% amid reports of potential U.S. government investment, while semiconductor stocks, including the VanEck Semiconductor ETF, slipped after Applied Materials issued a cautious earnings outlook.

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