Stocks rise as Wall Street braces for retail earnings

U.S. stocks recovered from a bearish start to the trading week on Monday as Wall Street sought to extend a summer rally that saw stock markets post their longest winning streak in 10 months during Friday’s session.

The S&P 500 rose 0.4% after the benchmark index marked its fourth consecutive week of gains, officially recouping half of its losses in the bear market since falling from its all-time high in January. The Dow Jones Industrial Average added 150 points, or about 0.5%, and the Nasdaq Composite gained 0.6%.

Investors are expecting a busy week for retail, with earnings expected from Walmart (WMT) ahead of Wednesday’s open to kick off reports for the sector.

Shares of Disney (DIS) soared 2.2% after Daniel Loeb’s Third Point revealed a new stake in the company and urged CEO Bob Chapek in a letter to make a series of changes, including integrating Hulu directly into the Disney+ DTC platform and acquiring the remaining minority from Comcast. stake before the early 2024 deadline. The letter also recommended that ESPN be divested to shareholders to help its parent company repay debt.

The Federal Reserve Bank of New York’s General Business Conditions Index, a measure of the state’s manufacturing activity, posted its second largest decline since 2001, with falling orders and shipments reflecting a dramatic decline demand. The gauge fell more than 42 points to -31.3, the second-worst drop in more than two decades after the April 2020 print. The reading came in lower than the economist’s lowest estimate , according to data from Bloomberg. Readings below zero indicate contraction.

Elsewhere in the economic data, the National Association of Home Buyers/Wells Fargo homebuilder sentiment index also disappointed – falling 6 points to 49 in August. The reading is below Bloomberg’s most optimistic economic forecast and below the breakeven measure of 50 for the first time since May 2020.

Traders work on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., August 8, 2022. REUTERS/Andrew Kelly

Investors cheered the summer’s rally after a string of better-than-expected economic releases renewed optimism on Wall Street. But some strategists remain skeptical of a market rebound as risks associated with inflation and monetary tightening persist.

“The macro, policy and earnings pattern are much less supportive for equities today,” Morgan Stanley’s Michael J. Wilson wrote in a note. “The risk/reward ratio is unattractive and this bear market remains incomplete.”

Chinese President Xi Jinping leaves the podium after speaking upon his arrival by bullet train, ahead of the 25th anniversary of the former British colony's handover to Chinese rule, in Hong Kong, China June 30, 2022. Selim Chtayti/Pool via REUTERS

Chinese President Xi Jinping leaves the podium after speaking upon his arrival by bullet train, ahead of the 25th anniversary of the former British colony’s handover to Chinese rule, in Hong Kong, China June 30, 2022. Selim Chtayti/Pool via REUTERS

Overseas, data out of China on Monday showed a slowdown in economic activity across the board over the past month. The world’s second-largest economy saw retail sales, industrial production and investment fall short of economists’ expectations in July.

China’s central bank also unexpectedly cut its key interest rate in a bid to reverse lagging economic growth as President Xi Jinping seeks re-election.

The Wall Street Journal reported that Chinese officials are arranging plans for a face-to-face meeting between Xi Jinping and President Biden in Southeast Asia this fall – a trip that would mark their first face-to-face meeting since the inauguration of Biden.

Oil futures fell on concerns about demand in China and the prospect of increased exports from Iran. U.S. West Texas Intermediate and Brent crude each fell about 4.5% to $87.97 and $93.66 a gallon, respectively.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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