Retail sales gains may test bets on big Fed rate cut

Updated at 9:07 AM EDT

U.S. retail sales bumped higher in August, adding an extra layer of uncertainty into the Federal Reserve's rate-cut debate as consumer spending continues to reveal resilience into the autumn months.

Headline retail sales rose Zero.1% last month, the Commerce Department reported Tuesday, to a collective tally of $710.eight billion, stronger than economists' consensus forecast of a Zero.2% decline. The July total used to be revised higher as well, to an advance of 1.1% from the original estimate of a 1% gain.

Gasoline-station sales were down 1%, the report indicated, after Energy Department data showed the national average slipped 2.eight% from July to $Three.507 per gallon.

The closely tracked keep watch over-group number, which excludes autos, building materials, place of job supplies, gas-station sales and tobacco, and feeds into the federal government's GDP calculations, rose Zero.Three% on the month and matched Wall Street forecasts.

The Atlanta Fed will update its GDPNow forecasting tool later inside the session. Its most modern reading, published Sept. 9, suggests a current-quarter growth rate of 2.5%.

"Investors are walking a tightrope inside the short term, because the market is cheering for lower inflation but is seeking out signs of strength from the patron," said Bret Kenwell, U.S. investment analyst at eToro. "It’s a not easy balancing act to peer pricing pressures ease without a giant dropoff in demand, but we continue to inch toward that reality."

"While this report didn’t blow estimates out of the water, it’s enough to reassure investors and remind them that the patron is more resilient than many think," he added

U.S. stock futures extended gains following the data liberate, as traders bet that the solid spending tally supports a soft landing for the arena's biggest economy while it is going to tame bets on a giant Fed rate cut.

The S&P five hundred is named 26 points higher, with the Dow expected to add 143 points from last night's record close. The Nasdaq, meanwhile, is named A hundred thirty points higher.

Benchmark 10-year Treasury note yields rose 1 basis point to some.629% following the data liberate, while 2-year notes were up Three basis points to some.582%.

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The CME Group's FedWatch indicates the Fed will lower its benchmark Federal Funds Rate by as a minimum half a percentage point the subsequent day in Washington, with the possibilities of a quarter-point cut pegged at 33%.

Commerce Department data last week showed that headline consumer-price inflation for August slowed to an annual rate of 2.5%, the underside since February 2021, while core price pressures held at a 3-year low of Three.2%.

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The Labor Department's summer jobs reports have also been dovish. They've showed the slowest advance in new hires to date this year following downward revisions for June and July and a headline tally of 142,000 in August.

Last month, the agency's Bureau of Labor Statistics also trimmed around 818,000 jobs from its estimate of gains over the 12 months led to March, with overall employment for the period pegged at around 2.1 million.

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