Wall Street stocks stumbled early in the week after China unexpectedly devalued its currency, but steadied thereafter on solid US data.
All three indices ended with gains for the week, with the Dow Jones Industrial Average adding 104.02 points (0.6 percent) to 17,477.40. The broad-based S&P 500 rose 13.97 (0.67 percent) to 2,091.54, while the tech-rich NASDAQ Composite Index increased 4.7 (0.09 percent) to 5,048.24.
FTN Financial chief economist Chris Low said initial “panic” over the Chinese policy receded as the week wore on.
“People are beginning to realize that perhaps they overreacted, but China has dominated conversations,” he said.
The Dow lost more than 200 points on Tuesday after China’s central bank devalued its yuan currency by nearly 2 percent against the US dollar, as authorities said they were seeking to push market reforms, in the context of a slowing economy.
That move and further devaluations in subsequent days raised concerns about a strengthening US dollar and whether the Chinese economy is weaker than thought.
Analysts also rued a potential “currency war” if other economies seek to devalue currencies.
However, China’s central bank soothed markets on Friday by setting the daily reference rate of the yuan against the US dollar marginally higher, ending an almost 5 percent fall over three days.
US data showed a solid gain in industrial production and higher wholesale prices. The most anticipated report, last month’s retail sales, rose 0.6 percent behind large gains in auto purchasing and advances in most other categories.
While retail sales bested analyst expectations, a batch of earnings from large companies in the sector sent conflicting signals.
On the weak end was Macy’s Inc, which reported a 25.7 percent drop in second-quarter earnings to US$217 million, missing expectations by a wide margin.
Much better were results from the upscale department store chain Nordstrom Inc, which lifted its outlook for the year following a 15.3 percent rise in second-quarter earnings to US$211 million behind higher sales.
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