Indexes backed away from session highs Tuesday morning after some positive signals on the U.S. consumer, while investors waited for an afternoon interview with Fed Chairman Jerome Powell that may offer some clues on monetary policy.
The Nasdaq composite jumped 2% early but reduced that gain to 0.9%. The S&P 500 pared its gain to 0.8%. Both indexes are building on a rebound that started Thursday. Smal caps outperformed, with the Russell 2000 up 1.3%.
The Dow Jones Industrial Average added 0.4% as components Home Depot and Walmart diverged after reporting results.
Volume rose on the NYSE and Nasdaq compared with the same time on Monday. That gives today's gains more credibility.
Retail Sales Rise Again
Retail sales rose 0.9% in April and 0.6% excluding autos, slightly above the Econoday consensus estimates. It was the fourth-consecutive increase in monthly U.S. retail sales.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 32354.69 | +131.27 | +0.41 |
| S&P 500 | (0S&P5) | 4039.72 | +31.71 | +0.79 |
| Nasdaq | (0NDQC ) | 11766.83 | +104.04 | +0.89 |
| Russell 2000 | 179.58 | +2.36 | +1.33 | |
| IBD 50 | 31.02 | +0.37 | +1.21 | |
Last Update: 10:58 AM ET 5/17/2022 |
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The Commerce Department also made substantial upward revisions to the prior month's sales data. March sales rose 1.4% from the initial estimate of 0.5% and ex-autos rose 2.1% from the 1.1% reported earlier.
BMO Capital Markets senior economist Sal Guatieri said consumers are still shopping, but higher prices are draining much of their spending power. Grocery purchases actually fell slightly in April, even as prices jumped 1%, he added.
"Excess savings, rising wages, strong job growth and some remaining pent-up demand for services are still propelling consumers forward, but it's pretty clear that the highest inflation in four decades, equity market turmoil, and rising interest rates are taking a toll," Guatieri noted.
In another economic report, U.S. industrial production rose 1.1% in April, the fourth consecutive monthly increase and well above the 0.4% rise in the Econoday forecast.
"Despite rising costs and supply constraints, strong demand for consumer goods and business equipment boosted industrial output in April for the fourth straight month amid broad-based strength," BMO economist Priscilla Thiagamoorthy said in an analysis.
Home Depot posted gains in first-quarter earnings and sales, surprising analysts who expected declines for the home improvement chain. Home Depot also raised full-year revenue guidance. Same-store sales rose 2.2%, including a 1.7% increase in U.S. stores. Analysts had expected a 3% decline. The stock jumped at the open but pared gains to 2%.
Walmart Disappoints As Stock Market Watches Retailers
But Walmart plunged nearly 9% after the nation's largest retailer missed April-quarter earnings expectations while higher labor and operating costs hurt margins. Comparable sales rose 3% in the quarter. The number of U.S. transactions was flat but the amount spent on each climbed 3%.
Walmart stock is now more than 9% below a 152.10 buy point from an early April breakout, which triggers a sell signal. The stock is on pace for largest drop since March 12, 2020, when it fell 9.1%, according to Dow Jones Market Data.
It's a big week of earnings for the retail sector, with Target and Lowe's announcing results Wednesday morning.
Several shipping companies also are reporting quarterly results this week. Late Monday, container ship leasing firm Danaos beat first-quarter earnings expectations. The stock climbed 1% at the open, but reversed lower. It is meeting some resistance at the 200-day moving average.
Powell To Speak; Twitter Up Despite Musk Doubts
The Fed's Powell is holding an interview starting at 2 p.m. ET at The Wall Street Journal's Future of Everything conference. Powell's comments will come as the stock market tries to gauge the pace of monetary tightening.
Twitter rose slightly in heavy trading, seeking to end a seven-day losing streak. Tesla CEO Elon Musk said in a tweet early today that his planned acquisition of the social media company cannot move forward unless there's more clarity on the number of fake Twitter accounts.
Innovator IBD 50 ETF rose 1.2%. Aspen Technology led with a 9.5% jump to a new high despite that Piper Sandler cut its price target on the IBD 50 software company to 159 from 170.
