NEW YORK: Consumer stocks drove the S&P 500 and the Dow higher on Tuesday as Walmart forecast a strong holiday quarter and monthly retail sales beat expectations, while losses in major technology stocks held back gains on the Nasdaq.
Data showed retail sales rose in October as Americans appeared to have started holiday shopping early to avoid empty shelves amid supply chain concerns, giving the economy a lift at the start of the fourth quarter.
The S&P consumer discretionary sector rose 0.9% and was among the top performers in early trading.
Walmart, the country’s largest brick-and-mortar retailer, raised its annual sales and profit forecasts. But its shares fell 1.9% as supply chain woes hit its third-quarter margins.
Retailer Home Depot Inc jumped 4% to a record high after beating quarterly same-store sales estimates.
“It is crystal clear that inflation is not standing in the way of consumers... this could serve as the vote of confidence signaling that the economy is still chugging along nicely,” said Mike Loewengart , managing director, investment strategy at E*TRADE Financial.
The positive retail data helped investors look past comments from Federal Reserve member James Bullard, who called for a more hawkish stance by the central bank in response to rising inflation.
“If the Fed decreased their purchases then it would create the potential for a rate hike sooner than mid-next year but today’s data doesn’t lean in that direction,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
Investors have also been fretting over President Joe Biden’s pick for Federal Reserve chair as Chair Jerome Powell’s term is set to end in February 2022.
Wall Street has been trading flat over the past few days on concerns over rising inflation and the prospect of slowing economic growth. Analysts at major Wall Street banks have also grown somewhat lukewarm on the S&P 500’s prospects in 2022.
However, a Bank of America survey showed investors were keen on ending 2021 in a risk-on mood.
At 10:01 a.m. ET, the Dow Jones Industrial Average was up 171.63 points, or 0.48%, at 36,259.08, the S&P 500 was up 14.42 points, or 0.31%, at 4,697.22. The Nasdaq Composite was up 31.58 points, or 0.20%, at 15,885.42.
Nvidia fell 0.4% after the UK ordered an in-depth probe of the chipmaker’s planned $50 billion-plus acquisition of chip designer Arm.
Gains in the Nasdaq were also held back by losses in major technology firms.
US-listed Chinese stocks and other China-exposed sectors rose on optimism over talks between President Joe Biden and Chinese leader Xi Jinping.
Electric-car maker Tesla Inc rose 2.3%, even as CEO Elon Musk sold $930 million in shares to meet tax withholding obligations related to the exercise of stock options. The stock had tumbled around 13% after Musk began selling shares last week.
JPMorgan Chase & Co also sued Tesla for $162.2 million over a breach of contract related to stock warrants.
Declining issues outnumbered advancers for a 1.20-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.56-to-1 ratio on the Nasdaq.
The S&P index recorded 32 new 52-week highs and two new lows, while the Nasdaq recorded 58 new highs and 105 new lows.
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