ASX set to jump as Wall Street rallies; Retailer surges as Trump backs Sydney Sweeney ad

US stocks are rallying and recovering much of their sharp losses from last week, when worries about how President Donald Trump’s tariffs may be punishing the economy sent a shudder through Wall Street.

The S&P 500 jumped 1.3 per cent in afternoon trading to claw back more than two thirds of Friday’s drop. The Dow Jones was up 493 points, or 1.1 per cent, in mid-afternoon trade, and the Nasdaq composite was 1.8 per cent higher. The Australian sharemarket is set to bounce higher, with futures pointing to a rise of 83 points, or 0.9 per cent, at the open. The ASX closed flat on Monday.

Wall Street has recovered much of Friday’s sharp losses on Monday.Credit: AP

Idexx Laboratories helped lead the way on Wall Street and soared 26 per cent after the seller of veterinary instruments and other health care products reported a stronger profit for the spring than analysts expected. It also raised its forecast for profit over the full year.

Tyson Foods likewise delivered a bigger-than-expected profit for the latest quarter, and the company behind the Jimmy Dean and Hillshire Farms brands climbed 3.2 per cent.

They helped offset a 3.5 per cent drop for Berkshire Hathaway after Warren Buffett’s company reported a drop in profit for its second quarter from a year earlier. The weakening was due in part to the falling value of its investment in Kraft Heinz.

The pressure is on US companies to deliver bigger profits after their stock prices shot to record after record recently. The jump in stock prices from a low point in April raised criticism that the broad market had become too expensive.

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Stocks just sank to their worst week since May not so much on that criticism but on worries that Trump’s tariffs may be hitting the US economy following a longer wait than some economists had expected. Job growth slowed sharply last month, and the unemployment rate worsened to 4.2 per cent.

Trump reacted to the disappointing jobs numbers by firing the person in charge of compiling them. He also continued his criticism of the Federal Reserve, which could lower interest rates in order to shoot adrenaline into the economy. The Fed has instead been keeping rates on pause this year, in part because lower rates can send inflation higher, and Trump’s tariffs may be set to increase prices for US households.

Friday’s stunningly weak jobs report did raise expectations on Wall Street that the Fed will cut interest rates at its next meeting in September. That caused Treasury yields to slump in the bond market, and they were mixed on Monday.

The yield on the 10-year Treasury eased a bit to 4.20 per cent from 4.23 per cent late Friday.

The two-year yield, which moves more closely with expectations for Fed action, held at 3.69 per cent from late Friday.

“In our view, if the Fed starts to cut rates at its September meeting, we believe this would be supportive for markets,” according to David Lefkowitz, head of US equities at UBS Global Wealth Management.

Such hopes, combined with profit reports from big US companies that have largely come in better than expected, could help steady a US stock market that may have been due for some turbulence. Before Friday, the S&P had gone more than a month without a daily swing of 1 per cent, either up or down.

This upcoming week may feature fewer fireworks on Wall Street following last week’s jobs report and profit updates from some of the US stock market’s most influential companies. This week’s highlights will likely include earnings reports from Disney, McDonald’s and Caterpillar, along with updates on US business activity.

On Wall Street, Wayfair jumped 10.3 per cent after the retailer of furniture and home decor said accelerating growth helped it make more in profit and revenue during the spring than analysts expected.

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Tesla rose 2.1 per cent after awarding CEO Elon Musk 96 million shares of restricted stock valued at approximately $US30 billion ($46 billion). The move, coming six months after a judge ordered the company to revoke his massive pay package, could remove potential worries that Musk may leave the company.

American Eagle Outfitters shares surged after Trump came out in support of a controversial ad from the company.

The spot, with the actress Sydney Sweeney, is the “HOTTEST ad out there,” Trump said in a social media post. He added American Eagle jeans are “flying off the shelves.” Trump deleted an earlier post, in which the actress’ first name was misspelled

The stock jumped as much as 18 per cent, the biggest gain intraday since May 12. Through last week’s close, the shares had declined 36 per cent this year.

CommScope soared 89.5 per cent after reporting a stronger-than-expected quarterly profit and saying that it will sell its connectivity and cable business to Amphenol for $US10.5 billion in cash. Amphenol rose 3.1 per cent

They helped offset a drop of 12.9 per cent for On Semiconductor, which only matched analysts’ expectations for profit in the latest quarter. The company, which sells to the auto and industrial industries, said it’s beginning to see “signs of stabilisation” across its customers.

Boeing was mostly unchanged after workers who build fighter jets for the troubled aerospace giant went on strike overnight.

In stock markets abroad, indexes rose across much of Europe and Asia.

South Korea’s Kospi rose 0.9 per cent, and France’s CAC 40 climbed 1.1 per cent, while Japan’s Nikkei 225 was an outlier with a drop of 1.2 per cent.

AP, Bloomberg

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