Nasdaq hits 9-month high after batch of upbeat economic data, debt-ceiling optimism

What’s driving markets

U.S. stocks opened mostly lower on Thursday as earnings from Walmart Inc.
WMT,
+0.70%
suggested the U.S. consumer’s strength might be waning, while Dallas Federal Reserve Bank President Lorie Logan said economic data don’t support Fed Chairman Jerome Powell’s push to pause the central bank’s rate-hiking campaign.

In U.S. economic data, the number of Americans who applied for unemployment benefits in mid-May sank to 242,000, aided by efforts in Massachusetts to counter a recent spike in fraudulent claims.

However, stocks soon bounced and powered higher during the morning session as a report on existing-home sales and a spate of other data showed the U.S. economy is in better shape than many economists had expected, said Art Hogan, chief market strategist at B.Riley Wealth.

“We see the housing market that has more demand, which is a positive economic reading,” Hogan said during a phone interview.

Both Target
TGT,
-3.72%
and Walmart shared guidance that hinted at weakening discretionary spending by American consumers. Still, economic data on retail sales and corporate earnings reports from a smattering of America’s largest retailers offered a mixed picture of the consumers’ strength, said Kim Caughey Forrest, founder and chief investment officer at Bokeh Capital Partners.

“Are things getting better for the consumer? or are they getting worse? We don’t really have an answer yet,” Forrest said during a phone interview.

“The guidance from a lot of these retailers has been pretty mediocre in terms of the state of the consumer,” said Matt Maley, chief market strategist at Miller Tabak + Co. during a phone interview.

Meanwhile, Fed-funds futures traders now see a 40.2% chance of another quarter-of-a-percentage-point rate hike by the Fed following Logan’s prepared remarks.

House Speaker Kevin McCarthy’s comments that a debt-ceiling deal could be reached as early as next week have helped to boost the Nasdaq while helping to keep stocks from seeing an even bigger selloff, Maley said.

Still, “I don’t think either equity traders nor bond traders are expecting a default,” Maley added.

Read: ‘Doomsday machine’: Here’s what could happen if the debt ceiling is breached

U.S. stocks have been trading in a tight range in recent months, with the S&P 500 vacillating within a range of just 65 points — between 4,100 and 4,165 — over the past 10 sessions.

Investors received a flurry of economic data reports, including jobless claims and the Philadelphia Fed factory survey for May — followed by existing-home sales numbers for April.

Companies in focus

• Walmart Inc. 
  WMT,
  +0.70%
  rallied Thursday, after the discount retail giant reported fiscal first-quarter results beat expectations and raised its full-year profit outlook, but provided a second-quarter earnings view that was below Wall Street forecasts.

• Micron Technology Inc. shares
  MU,
  +4.37%
  climbed as Bloomberg News reported it is expected to get about $1.5 billion in financial incentives from the Japanese government to help build advanced memory chips.

• PacWest Bancorp shares
  PACW,
  +9.17%
  rose, extending Wednesday’s 22% surge.

• Cisco Systems Inc. sharese
  CSCO,
  -0.44%
  fell after the networking giant beat expectations for quarterly profit and sales in a report, but executives did not increase their top target for annual revenue and revealed that orders declined again.