Stocks rally on signs of further central bank stimulus

Reuters

• Stocks rose on Tuesday as new signs emerged that central banks are prepared to roll out economic stimulus should recession signs continue to arise.
• The Federal Reserve suggested in its most recent minutes that the central bank could cut rates further in 2019 if the global economy continued to weaken.
• Target surged 20% to a record high on Wednesday after the retailer posted an earnings beat and raised its profit outlook for the year.
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Stocks climbed on Wednesday as investors were encouraged by more signs global central banks could step in to support economic growth with new stimulus.

The Federal Reserve indicated in its latest minutes that it could continue to lower interest rates this year if the environment called for further easing. The central bank also reiterated that its July rate cut was more of an insurance policy against a weakening macro backdrop rather than the start of a prolonged easing cycle.

"Near-term adjustments of the stance of monetary policy would appropriately remain dependent on the implications of incoming information for the economic outlook," the minutes from the July 31 meeting said.

President Trump returned to Twitter to attack the Fed and Chairman Jerome Powell again on Wednesday. The president wrote in a tweet that "the only problem we have is Jay Powell and the Fed," and that Powell is "like a golfer who can't putt."

Powell is scheduled to speak at the Jackson Hole Symposium this week, and investors will be looking for more clues of which direction the Fed plans on moving with monetary policy.

Here's a look at the major indexes as of the 4 p.m. close on Tuesday:

• The S&P 500 climbed 0.82%, to 2,924.43.
• The Dow Jones Industrial Average rose 0.93%, to 26,202.73.
• The Nasdaq Composite jumped 0.90%, to 8,020.21.

Shares of Target soared 20% to an all-time high after the retailer posted second-quarter earnings results that beat Wall Street estimates. The company attributed its results to an increase in sales from existing Target locations and digital channels. Target also raised its profit outlook for the year following the strong quarter.

Lowe's stock surged the most 11 years after the home-improvement retailer posted second-quarter revenue and profit that exceeded analyst expectations. The company said sales from existing Lowe's stores grew by 2.3% during the period. Chief Executive Officer Marvin Ellison said the retailer's results were reflective of a "solid macroeconomic backdrop."

Within the S&P 500, these were the largest gainers:

• Target: 20.4%
• Lowe's: 10.4%
• Alliance Data Systems: 5.6%

And the largest decliners:

• Aflac: (-5.6%)
• General Electric: (-2.6%)
• Halliburton: (-2.4%)

Every sector within the S&P 500 rose on Wednesday. Consumer discretionary stocks posted gains of 1.9%, while technology climbed 1.1%.