Stocks ended firmly higher Thursday amid optimism that Federal Reserve rate cuts and a resilient domestic economy will continue to support corporate profit growth.
The Dow Jones Industrial Average surged 554 points, or 1.39%, to close out the session at 40,563.06, while the S&P 500 gained 1.61% at 5,543.22, and the tech-heavy Nasdaq leaped 2.34% to 17,594.50.
Walmart shares climbed 6.6% after the retailing giant beat Wall Street’s expectations for sales and profits and raised its forecast for the year.
Retail sales increased 1% in July, beating estimates that called for a 0.3% uptick.
“The consumer continues to propel the economy forward,” Bill Adams, chief economist for Comerica Bank. “The solid growth of retail sales means the Fed is more likely to cut interest rates a quarter percent at the September decision than a half percent.”
“The Fed will likely signal additional rate cuts are expected if inflation continues to moderate and the unemployment rate holds around four and a quarter percent,” he added.
Updated at 11:45 AM EDT
The Cisco kid
Cisco Systems (CSCO) tested the highest levels in six months Thursday after the network equipment maker posted better-than-expected quarterly earnings and a robust demand forecast.
The group also unveiled plans to trim its global headcount by around 7%, following a similar-sized reduction in February, with the collective cuts likely to lead to a $1 billion charge on pre-tax profits.
Cisco shares were last marked 7.33% higher in late-morning trading and changing hands at $48.72 each.
Don’t look now, but sleepy Cisco $CSCO might just be waking up. Nice break above the 30 WEMA. Earnings must’ve been good… 😂 pic.twitter.com/Bypy5joL8U
— Andy Heilman, CFA (@imapedestrian) August 15, 2024
Updated at 9:35 AM EDT
Solid open
The S&P 500 turned positive for the quarter in the opening minutes of trading, rising 58 points, or 1.07%, to peg the benchmark at the highest level since July 31.
The Nasdaq was marked 193 points, or 1.11% higher while the Dow gained 500 points, or 1.26% thanks in part to Walmart's best start to a session in around four years.
S&P 500 Opening Bell Heatmap (Aug. 15, 2024)$SPY +1.13%🟩$QQQ +1.34% 🟩$DJI +1.16% 🟩$IWM +2.34% 🟩 pic.twitter.com/leZQzXpUVb
— Wall St Engine (@wallstengine) August 15, 2024
Updated at 8:39 AM EDT
Waiting for recession
Retail sales powered higher last month, according to Commerce Department data, rising 1% from the previous month to a collective $709.7 billion and the best gain since April of 2022.
Weekly jobless claims, meanwhile, fell by 7,000 to 227,000 over the period ending on August 10, belying concerns of a weakening labor market.
Benchmark 10-year note yields rose 6 basis points following the data releases to trade at 3.902% while 2-year notes jumped 10 basis points to 4.049%.
Stock futures added to gains, as well, with the S&P 500 called 40 points higher and the Dow expected to rise 300 points at the start of trading. The Nasdaq is priced for a 160 point gain.
US July Retail Sales: outlays on food and beverages increased 0.9%. Why? Food price inflation has stabilized and in some cases are close to flat. This is good news for the consumer and the broader American household. Real income growth supports improved consumption. pic.twitter.com/f81nNIZNHP
— Joseph Brusuelas (@joebrusuelas) August 15, 2024
Updated at 7:15 AM EDT
Everyday record highs
Walmart shares soared higher in premarket trading, and look set to open at an all-time high, after the world's biggest retailer posted stronger-than-expected second quarter earnings and boosted its full-year profit outlook.
Walmart shares were marked 6.2% higher in premarket trading immediately following the earnings release to indicate an opening bell price of $72.90 each, a move that extends the stock's year-to-date advance to around 40%.
Related: Walmart stock soars to record high on Q2 earnings, profit forecast
Stock Market Today
Stocks ended firmly higher Wednesday, powered in part by a muted July inflation report that showed headline price pressure falling below the 3% mark for the first time since the spring of 2021, a move that likely cemented bets on a September Fed rate cut.
Related: CPI inflation report upsets betting on big Federal Reserve rate cut
However, prices pressures at the core level, which strips out volatile components such as food and energy, came in largely in-line with Street forecasts, clipping bets on an outsized rate cut when the Fed meets next month in Washington.
Stocks were also supported by one of the biggest declines in market volatility on record, with the CBOE Group's VIX index falling more than 58% over the past seven trading days.
The VIX was last marked 9.6% lower in the overnight session at $16.39, a level that suggests traders are expecting daily swings of 1.02%, or 56 points, for the S&P 500 over the next thirty days.
Focus in today's session will shift to the health of the U.S. consumer, with the Commerce Department reporting July retail sales figures and Walmart (WMT) posting its second quarter earnings update prior to the opening bell.
The Atlanta Fed will also updates its GDPNow forecast later in the session, with investors looking for updates from its current-quarter growth estimate of 2.9%.
Related: Main Street businesses push back on Wall Street's recession gloom
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which is now nearly flat for the quarter, are priced for a modest opening bell gain of around 9 points.
The Dow Jones Industrial Average, meanwhile, is called 100 points higher while the tech-focused Nasdaq is set for a 60 point advance to start the session.
Benchmark 10-year Treasury note yields were last marked at 3.847% heading into the start of the New York trading session, with 2-year notes trading at 3.964%.
In Europe, trading volumes owning to Assumption Day observances around the region, although the Stoxx 600 was open for dealing and was last up 0.19% in the mid-day session.
Britain's FTSE 100, meanwhile, was essentially unchanged from last night's close following GDP data showing a modest 0.6% expansion over the three months ending in June.
More Wall Street Analysts:
- Analysts reboot Amazon stock price targets after earnings
- Analyst reboots Rivian stock price target on updated plans
- Analysts reboot Arm Holdings stock price target following earnings
Overnight in Asia, stocks in China ended higher following a mixed set of July economic data, which included a disappointing reading for industrial output, that stoked bets for a new stimulus boost from the central government.
In Japan, a stronger-than-expected second quarter GDP reading of 3.1%, well ahead of the 2.1% forecast, lifted the Nikkei 225 0.78% into the close of trading and pegged the benchmark at its highest levels since August 1.
Related: Veteran fund manager sees world of pain coming for stocks
