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US stocks rise on strong retail sales data

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Bounce comes after rout in US stocks on Wednesday spread alarm globally

NEW YORKUS: stock index futures rose in volatile trading yesterday, as strong July retail sales data and Walmart's upbeat results eased some concerns about the economy slipping into recession, while mixed reports on the trade dispute kept investors on edge.

The Dow Jones Industrial Average rose 34.83 points, or 0.14 per cent, at the open to 25,514.25. The S&P 500 opened higher by 5.6 points, or 0.2 per cent, at 2,846.20. The Nasdaq Composite gained 16.26 points, or 0.21 per cent, to 7,790.20 at the opening bell.

The bounce in shares in the US came after the blue-chip Dow index posted its worst day this year on Wednesday, as recession fears gripped the market after the US Treasury yield curve inverted for the first time in 12 years, Reuters reported.

The yield on the 10-year US Treasury note briefly slid below the yield on the two-year bond, a so-called "inversion" that has been a reliable harbinger of recession for decades.

Stock markets saw hefty losses on Wednesday, gripped by fears for the global economy following poor Chinese and German data and as key US bond benchmark signalled more trouble ahead.

The Dow finished with a loss of some 800 points, or 3.1 per cent, at 24,479.42, while leading European bourses shed more than 2 per cent.

The malaise spread to Asia yesterday, with Australia's S&P/ASX 200 diving 2.9 per cent, Japan's Nikkei closing 1.21 per cent lower and The Straits Times Index falling 0.68 per cent to touch a two-month low.

Sentiment did get a boost yesterday after the US Commerce Department said retail sales rose 0.7 per cent last month, much higher than the expectations of a 0.3 per cent rise, as consumers bought a range of goods even as they cut back on motor vehicle purchases.

"The July number shows that the weakest economic data that people keep pointing out to for a global slowdown is coming from outside the US not inside the US," said Mr Randy Frederick, vice-president of trading and derivatives for Charles Schwab.

But US manufacturing continued its steady decline last month amid the ongoing trade war with China and slowing global economy, while the hurricane-hit oil sector also helped drag down total output, the Federal Reserve said yesterday.

Economists have warned for months that the grinding US-China trade war was crimping capital investment and weighing on global sentiment, already dented by the slowdown in China and expected Brexit impact on Britain and Europe.

While key US economic indicators in employment and consumer spending have remained solid, Wednesday's session suggests some of that confidence is waning.

Bond yields have gyrated in recent weeks, with analysts warning that tumbling rates are a sign of a worsening medium-term economic outlook.

"Sinking yields are the bond market's way of pressuring the Fed to step on the monetary gas pedal and cut interest rates," said Mr Joe Manimbo, senior market analyst at Western Union Business Solutions.

US President Donald Trump, meanwhile, used the occasion to again blast Federal Reserve chair Jay Powell, calling him "clueless" for not cutting interest rates more quickly.

But some observers wonder whether the Fed and other central banks will be able to do much.