NEW YORK, June 15 — Wall Street stocks opened higher today following a report showing disappointing US retail sales as markets await the Federal Reserve’s latest response to inflation.
US retail sales dropped 0.3 per cent in May to US$672.9 billion (RM2.9 trillion), as the hit from higher gasoline prices and other costs pinch consumers, according to Commerce Department data.
The report comes ahead of the US central bank’s policy announcement later Wednesday that many investors think will result in a 75-basis-point hike after weeks of the Fed telegraphing a smaller increase.
In other central bank news, the European Central Bank held an emergency meeting to discuss tools for quelling rising borrowing costs for more indebted eurozone members as it, too, embarks on a monetary tightening policy.
About 20 minutes into trading, the Dow Jones Industrial Average was up 1.2 per cent at 30,731.42.
The broad-based S&P 500 gained 1.4 per cent to 3,788.66, while the tech-rich Nasdaq Composite Index jumped 1.7 per cent to 11,011.31.
Expectations for the larger rate hike are accompanied by the “assumption that a 50-basis point rate hike would be viewed as weak and disappointing given the inflation pressures,” said Briefing.com analyst Patrick O’Hare.
“The Fed Chair, however, is going to have to produce something at today’s press conference that helps restore the Fed’s inflation-fighting credibility. Frankly, the unruly behavior of the bond markets implies a lack of credibility on that front.” — AFP
