Wall Street Welcomes Signs Economy Is Cooling

Stocks closed higher on Wall Street Tuesday as two economic reports suggested the economy is cooling enough for the Federal Reserve to pause hiking interest rates. The S&P 500 rose 64.32 points, or 1.5%, to 4,497.63, its biggest gain since early June. The Dow Jones Industrial Average rose 292.69 points, or 0.8%, to 34,852.67. The Nasdaq composite rose 238.63 points, or 1.7%, to 13,943.76. The Conference Board, a business research group, reported that consumer confidence tumbled in August, surprising economists that were expecting levels to hold steady around the strong July reading. Consumer confidence and spending have been closely watched amid persistent pressure from inflation.

Also on Tuesday, the government reported that job openings fell to the lowest level since March 2021, a larger drop than economists expected, the AP reports. The report also showed that the number of Americans quitting their jobs fell sharply for the second straight month, clear signs that the labor market is cooling in a way that could reduce inflation. A strong job market has been credited as a bulwark against a recession, but it has made the Fed's mission to tame inflation more difficult. The latest data will likely be welcomed by the central bank, because fewer job openings and less quitting reduces pressure on employers to raise pay to find and keep workers.

Wall Street is also reviewing the latest earnings from several big retailers. Best Buy rose 3.9% after the consumer electronics retailer beat Wall Street forecasts, even as second-quarter profit and sales declined from a year ago. Discount retailer Big Lots surged 26.8% after reporting strong financial results.

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Investors and economists have several more big economic reports on tap this week. The government will provide another update on the nation's gross domestic product on Wednesday. It will also release its monthly employment report for August on Friday. A key inflation update is expected on Thursday when the government reports personal consumption and expenditures for July. It is the Fed's preferred measure for inflation and has been cooling for months. It eased to 3% in June and was as high as 7% a year ago. (More stock market stories.)