Enthusiasm reverberated on Wall Street on Tuesday following a series of positive reports indicating that the economy is in a stronger position than initially feared. The S&P 500 surged by 49.59 points, or 1.1%, to reach 4,378.41. The Dow Jones Industrial Average saw an increase of 212.03 points, or 0.6%, reaching 33,926.74. Meanwhile, the Nasdaq composite experienced a notable rise of 219.89 points, or 1.6%, soaring to 13,555.67. Airlines played a significant role in driving this bullish trend, with Delta Air Lines confirming ongoing pent-up demand as travelers make up for lost opportunities to journey during the pandemic. Of particular note is the continued strong financial status of high-income customers, who contribute to three-quarters of air travel expenditure while seemingly unaffected by high inflation.
Delta witnessed a robust 6.8% surge in stock value as the airline projected this year’s earnings to surpass earlier estimations. A similar upward trajectory was observed in the stock prices of American Airlines (up 5.5%) and United Airlines (up 5.1%). The tech giants also showed resilience, maintaining their impressive performance this year due to growing excitement surrounding artificial intelligence technology. Nvidia, a major player in the AI industry, experienced a 3.1% increase, bringing its overall gains for the year to a remarkable 186.5%.
However, other companies were adversely affected by high inflation. Walgreens Boots Alliance suffered a significant 9.3% drop in stock price after reporting weaker profits for the latest quarter than analysts had anticipated. The retail pharmacy chain also revised its earnings forecast for this fiscal year, reflecting a shift in consumer spending behavior towards seeking greater value amidst high inflation. In addition, Lordstown Motors plummeted by 17.2% after filing for Chapter 11 bankruptcy protection. The electric pickup truck company had previously warned of potential failure due to a dispute with electronics company Foxconn regarding a $170 million investment in the startup.
On the positive side, Tuesday’s economic reports exceeded expectations. Consumer confidence reached its highest level since the beginning of 2022, while orders for long-lasting manufactured goods grew unexpectedly, surpassing economists’ forecasts of a decline. Sales of new homes in May also outstripped economists’ expectations, leading to a rise in the stock prices of homebuilders. Lennar rose by 4.1% and Toll Brothers by 3.3%. (Read more stock market stories.)
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