S&P 500 rose Thursday, as softer retail sales data signaling a weaker consumer stoked bets on Federal Reserve rate cuts, pushing Treasury yields lower.

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average rose 271 points, or 0.7%, the S&P 500 index added 0.4%, and the NASDAQ Composite slipped 0.2%. 

PPI inflation, retail sales slump to amp up rate-cut bets

A duo of economic reports pointing to slower inflation and a weaker consumer helped boost bets on Fed rate cuts, pushing Treasury yields sharply lower. 

Yields on the 10-year and rate-sensitive 2-year Treasuries were down sharply as the data are expected to provide the Fed with some relief. 

"the cooler-than-expected consumer price and producer price report in April offers some relief for a Fed increasingly concerned about an acceleration in cost pressures, especially as near-term inflation expectations have soared more recently to the highest level since 1981," Stifel said in a recent note.

The latest producer price index showed that factory gate prices slumped on a monthly basis in April, in the latest sign of cooling inflationary pressures.

The producer price index for final demand fell 0.5% in April, the first monthly fall since 2023, after the previous month’s figure was revised to flat from a fall of 0.4%.

Taking out more volatile items like fuel and food, so-called “core” PPI also fell on a monthly basis, down 0.4%. 

Data released earlier this week showed that the more widely-watched consumer price index grew by 2.3% in the 12 months to April, compared with expectations that it would match March’s pace of 2.4%.  

It was the lowest annual rate of inflation since February 2021, shortly before pent-up pandemic-fueled demand and supply constraints led to soaring prices.

Additionally, retail sales fell 1.0% on the month in March, a more substantial loss than the 0.5% expected. 

A surge of buying before the implementation of Trump’s punishing tariffs led to the largest increase in the metric in more than two years in March. Separate surveys have indicated that households have widely been anticipating that the levies will push up prices.

Walmart impresses in Q1

The main corporate release Thursday comes from retail giant Walmart (NYSE:WMT), with the retail giant posting better-than-anticipated first-quarter earnings, although its finance chief warned that tariff tensions could soon drive prices higher..

Known for its low prices and massive selections, Walmart has become something of a bellwether for shopper sentiment. In February, the company issued downbeat guidance for the year, although CFO John David Rainey said American consumers remain "resilient" and focused on value.

Elsewhere, Chinese e-commerce titan Alibaba (NYSE:BABA) missed earnings expectations for its fiscal fourth quarter on both the top and bottom line, while agricultural equipment manufacturer Deere & Company (NYSE:DE) reported better-than-expected second quarter results, but lowered the bottom end of its full-year net income forecast range amid challenging market conditions.

Cisco Systems (NASDAQ:CSCO) raised its annual results forecast, betting on steady demand from cloud customers for its networking equipment, driven by the artificial intelligence boom.

UnitedHealth (NYSE:UNH) stock slumped after the Wall Street Journal reported the company was being investigated by the Department of Justice over alleged criminal fraud involving Medicare. 

The investigation marks a new headwind for UnitedHealth, which is already nursing a sharp selldown in its shares this year on concerns over government scrutiny, weakening financials, and signs of internal strife. The company abruptly replaced its CEO this week. 

Foot Locker (NYSE:FL) stock soared after Dick’s Sporting Goods (F:DKS) confirmed it is exploring a deal to buy the company for roughly $2.3 billion.

(Ambar Warrick and Peter Nurse contributed to this article)