US stocks have rallied, boosted by upbeat earnings, strength in consumer spending and signs that inflation is peaking, easing worries about a sharp slowdown in economic growth.

All of the 11 major S&P sectors advanced in morning trade, with technology and consumer discretionary sectors up 2.2 per cent each.

Ulta Beauty gained 11.1 per cent to top the S&P 500 index after the beauty products retailer posted strong first-quarter results, helped by easing COVID-19 curbs.

Dell Technologies Inc jumped 11.6 per cent after it posted upbeat quarterly profit and revenue as enterprises invested heavily in supporting hybrid work.

The Commerce Department’s report showed consumer spending rose by a more than expected 0.9 per cent in April and inflation rose at a slower rate, raising hopes that the Federal Reserve might not hike rates as aggressively as previously thought.

March spending growth was also revised to 1.4 per cent from 1.1 per cent.

The personal consumption expenditures price index, the Fed’s preferred inflation gauge, gained 0.2 per cent last month after shooting up 0.9 per cent in March.

“If the consumer is able to keep spending and the prior number was revised up, that’s good news,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

“Right now it’s just a rally in a bear market… the market has just got extremely oversold and people are looking for bargains.”

Wall Street’s main indexes closed sharply higher on Thursday after some optimistic retail earnings outlook, mixed economic data and less-hawkish minutes from the US Federal Reserve’s meeting brought back buyers into the market.

The three major indexes are on track to snap their longest weekly losing streaks in decades.

The benchmark S&P 500, the blue-chip Dow and the tech-heavy Nasdaq have risen more than 5.0 per cent each so far this the week, putting them on course for their best weekly gain since mid-March.

In early trading, the Dow Jones Industrial Average was up 235.71 points, or 0.72 per cent, at 32,872.90, the S&P 500 was up 60.51 points, or 1.49 per cent, at 4,118.35, and the Nasdaq Composite was up 247.88 points, or 2.11 per cent, at 11,988.53.

Gap Inc and American Eagle Outfitters fell 3.6 per cent and 3.4 per cent respectively after the clothing retailers trimmed their annual profit forecasts amid decades-high inflation.

The CBOE volatility index fell for a third straight session and last stood at 25.97 points.

Advancing issues outnumbered decliners by a 5.76-to-1 ratio on the NYSE and by a 3.24-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and 29 new lows while the Nasdaq recorded 19 new highs and 49 new lows.