NEW YORK — Stocks rose Thursday, revving the longest rally for Wall Street in a year and a half into a higher gear.
The S&P 500 rallied 1.2% to reach heights untouched since April 2022. The Dow Jones Industrial Average climbed 428 points, or 1.3%, while the Nasdaq composite rose 1.1%.
Homebuilder Lennar helped lead the S&P 500 with a gain of 4.4% after reporting stronger profit and revenue for the latest quarter than expected. It also gave a better-than-expected forecast for upcoming deliveries, saying customers are accepting the “new normal” of higher interest rates.
The stock market is still absorbing the Federal Reserve’s warning from Wednesday that it could raise interest rates two more times this year in its battle against inflation. It has already raised its benchmark rate to the highest level since 2007, which has helped slow inflation somewhat but has also caused pain in some areas of the economy.
The Fed is trying to find the right level for rates where it can slow spending by Americans enough to get inflation under control but not so much that it causes a recession. Economic reports on Thursday offered a mixed picture of how that effort is going.
But for a market that’s been relentlessly rising, that was enough to firm hopes that the Fed may end up raising rates only once this year and that the economy can skirt a painful recession.
“Today’s mixed economic data probably won’t provide much clarity for investors wondering what to make of the Fed’s mixed message from Wednesday,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
Treasury yields fell immediately after the reports. In the stock market, meanwhile, a wide range of stocks climbed to quell some criticism that this year’s rally has been because of only a handful of companies benefiting from a frenzy over artificial intelligence.
“The Fed remains data and event dependent, so investors globally will need to be so as well,” said John Vail, chief global strategist at Nikko Asset Management.
Thursday’s headline economic report showed that sales at U.S. retailers unexpectedly strengthened last month, when economists were forecasting a drop. That could be a sign that spending by consumers overall is holding up despite more expensive rates on credit cards and other loans.
But underneath the surface, the numbers were a touch weaker than expected after ignoring sales of autos, fuel and some other areas. Those numbers feed into the U.S. government’s estimates for the overall economy’s growth.
A separate report said slightly more workers applied for unemployment benefits last week than expected. Though the number is still relatively low compared with history, a tick higher could be a sign that a remarkably resilient job market is finally starting to loosen following the Fed’s barrage of rate increases since early last year.
In manufacturing, the effect of higher rates has been more clear. The industry has been contracting for months, though it accounts for only a relatively small part of the economy.
One report Thursday said manufacturing activity in the mid-Atlantic region suffered its 10th straight month of contraction. Another, though, said sentiment among manufacturers in New York state unexpectedly improved this month.
Treasury yields slumped after the reports. The yield on the 10-year Treasury fell to 3.72% from 3.79% late Wednesday. It helps set rates for mortgages and other important loans.
The two-year yield, which moves more on expectations for the Fed, fell to 4.64% from 4.69% late Wednesday.
The S&P 500 rose 53.25 points to 4,425.84. The Dow gained 428.73 to 34,408.06, and the Nasdaq climbed 156.34 to 13,782.82.
Asian stocks were mixed. Chinese indexes rose amid hopes for more stimulus from its central bank as the recovery from anti-COVID restrictions for the world’s second-largest economy stumbles. Such hopes also boosted prices for crude oil by more than 3%.
Information for this article was contributed by Yuri Kageyama and Matt Ott of The Associated Press.