Dow and S&P 500 climb as Walmart’s upbeat results, others bolster optimism

  • Walmart sees its profits fall less this year
  • Home Depot exceeds sales estimates
  • US Treasury Yields Rise
  • Indices: Dow up 0.7%, S&P 500 up 0.2%, Nasdaq down 0.2%

NEW YORK, Aug 16 (Reuters) – The Dow Jones and S&P 500 rose on Tuesday as stronger-than-expected earnings and outlooks from Walmart and Home Depot bolstered opinions on consumer health, while tech stocks fell and weighed on the Nasdaq.

The S&P 500 consumer discretionary and commodity sectors (.SPLRCT), (.SPLRCS) gave the benchmark its biggest increase, while the S&P 500 retail index (.SPXRT) increased by 1.9%.

The S&P 500 also came close to breaking above its 200-day moving average, a key technical level. The benchmark has not closed above this level since early April.

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Walmart Inc. (WMT.N) shares jumped 5.1% after the retailer forecast a weaker-than-expected annual profit decline, while Home Depot Inc (HD.N) gained 4.1% after beating quarterly sales estimates. Read more

At the same time, the 10-year US Treasury yield rose, weighing on technology and other high-growth stocks. Microsoft Corp Stocks (MSFT.O) were down 0.3% on Tuesday after recent gains.

After a tough first half, the S&P 500 is up nearly 14% since the start of July, helped in part by earnings that beat Corporate America’s expectations.

Investors have also been optimistic lately about the Federal Reserve’s ability to achieve a soft landing for the economy by tightening policy and raising interest rates to reduce inflation, which has been high for decades.

“When you go from a bear market to a bull market, especially when the Fed is raising rates and the consumer is worried, you really want to see consumer discretionary buoyed by enthusiasm. And today’s movement today in discretionary names is positive for the market,” said Quincy Krosby, chief global strategist for LPL Financial in Charlotte, North Carolina.

Traders work on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York, U.S. August 8, 2022. REUTERS/Andrew Kelly/File Photo

In July, Walmart cut its profit forecast amid soaring food and fuel prices.

The Dow Jones Industrial Average (.DJI) rose 239.57 points, or 0.71%, to 34,152.01, the S&P 500 (.SPX) gained 8.06 points, or 0.19%, to 4,305.2 and the Nasdaq Composite (.IXIC) fell 25.50 points, or 0.19%, to 13,102.55.

With the results of the majority of S&P 500 companies, second-quarter earnings are expected to have risen 9.7% from a year earlier, versus an estimated 5.6% on July 1, according to IBES data from Refinitiv.

Target Corp Stocks (TGT.N)which reports quarterly results early Wednesday, closed up 4.6%.

Nonetheless, investors will be eager to see July’s U.S. retail sales data, which is also due on Wednesday. Also on Wednesday, the Fed is expected to release minutes from its July policy meeting.

Investor sentiment is still bearish, but more “apocalyptically,” according to BofA’s monthly survey of global fund managers in August. Read more

Volume on U.S. exchanges was 10.92 billion shares, compared to an average of 10.96 billion for the full session over the past 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.22 to 1; on the Nasdaq, a ratio of 1.21 to 1 favored the decliners.

The S&P 500 posted 8 new 52-week highs and 29 new lows; the Nasdaq Composite recorded 82 new highs and 40 new lows.

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Reporting by Caroline Valetkevitch in New York Additional reporting by Bansari Mayur Kamdar, Susan Mathew and Anisha Sircar in Bengaluru Editing by Anil D’Silva and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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