US share markets buoyed by strong economic data
US stock markets rallied on Tuesday after reports suggested the economy is in better shape than feared. The S&P 500 rose 1.1 percent to to 4,378, the Dow Jones Industrial Average rose 0.6 percent to 33,926, and the Nasdaq Composite gained 1.7 percent to finish at 13,555. Airlines helped lead the way after Delta Air Lines said it still sees pent-up demand in the pipeline as passengers make up for lost opportunities to travel during the pandemic. It highlighted high-income customers in particular, who account for three-quarters of spending on air travel and still look to be in good financial shape despite high inflation. Delta’s stock took off by 6.8 percent after it said earnings this year should come in at the top end of the range it had earlier forecast. American Airlines climbed 5.5 percent, and United Airlines rose 5.1 percent. Big tech stocks were also strong. The US stock market has been on a tear this year despite much higher interest rates meant to get inflation under control, in part because the economy has so far managed to avoid a recession. But many investors are just delaying their predictions for the start of a recession rather than cancelling them. Reports on the economy Tuesday were largely stronger than expected. A reading on consumer confidence jumped to its highest level since the start of 2022, and orders for long-lasting manufactured goods unexpectedly grew, beating economists’ forecasts for a pullback. Sales of new homes in May also topped economists’ expectations, which sent stocks of homebuilders climbing. Lennar rose 4.1 percent and Toll Brothers rose 3.3 percent. A measure of manufacturing activity in the Richmond, Virginia, region stretching from Maryland to South Carolina contracted, but not by as much as economists feared. Manufacturing has been one of industries hardest hit by much higher interest rates. All the economic data will feed into decisions by the Federal Reserve and other central banks about whether to keep cranking interest rates higher. High rates can undercut inflation, but they do so by slowing the entire economy and raising the risk of a recession. (AP)