US stocks tried to bounce back on Thursday from a steep selloff a day earlier, as strong retails sales data and upbeat Walmart earnings eased concerns of a recession, but mixed signals on trade and Cisco's dismal forecast capped gains. Recession fears have gripped the market after the US Treasury yield curve inverted for the first time in 12 years on Wednesday on growing worries about the impact of a bruising trade war on global growth.
However, a Commerce Department report showed a much better-than-expected rise in July retail sales as consumers bought a range of goods even as they cut back on motor vehicle purchases. "Data still indicates that the consumer is in a relatively good shape, it points to the fact that even with an inverted yield curve that we saw yesterday, a recession is not coming so fast," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
Cisco Systems Inc dropped 7% and was the biggest drag on all three major indexes, after the Dow component blamed the bruising US-China trade war for poor quarterly forecasts. China's finance ministry said earlier in the day that it would retaliate to the latest US tariffs, spooking markets initially.
However, a spokeswoman for the ministry later said, "We hope the US will meet China halfway, and implement the consensus of the two heads of the two countries in Osaka." Walmart Inc shares rose 4.3% after the retailer reported second-quarter US comparable sales that beat estimates and boosted its earnings forecast for the year.
The company's strong report lifted the consumer staples sector up 1.5%, which gave the biggest boost to the market. At 12:14 p.m. ET, the Dow Jones Industrial Average was up 112.05 points, or 0.44%, at 25,591.47, the S&P 500 was up 11.95 points, or 0.42%, at 2,852.55. The Nasdaq Composite was up 13.38 points, or 0.17%, at 7,787.31.
The benchmark S&P 500 is about 6% away from an all-time high hit in July. General Electric plunged as much as 15.3%, and was on pace to post its biggest one-day drop in a decade, after a whistleblower in the Bernard Madoff Ponzi scheme case alleged that company financial filings masked the depths of its problems.
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