Stocks soared on Thursday, driven by robust retail sales data for July and impressive earnings reports from major companies like Walmart and Cisco Systems. The positive economic indicators helped ease recession fears and boosted investor confidence.
Key Takeaways
- Retail Sales: Retail sales in July increased by 1%, surpassing the expected 0.3% rise and rebounding from June’s 0.2% decline.
- Walmart Earnings: Walmart’s stock jumped 6.6% after the company reported better-than-expected earnings and raised its guidance for the upcoming quarters.
- Cisco Systems: Cisco Systems saw a 6.8% increase in its stock price following strong earnings and revenue reports for its fiscal fourth quarter.
- Ulta Beauty: Ulta Beauty surged 11.2% after Warren Buffett’s Berkshire Hathaway revealed a new stake in the company.
- Market Performance: The Nasdaq Composite rose 2.3%, the S&P 500 gained 1.6%, and the Dow Jones Industrial Average increased by 1.4%.
Retail Sales Rebound in July
The Census Bureau reported that retail sales were up 1% in July, a significant rebound from June’s downwardly revised 0.2% decline. This increase far exceeded the 0.3% rise that economists had anticipated. The strong retail sales data helped to alleviate concerns about a potential recession.
Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, noted that the robust retail sales numbers should quell some of the pessimism that had been prevalent earlier in the month. He also suggested that the Federal Reserve might be able to start its rate-cutting cycle without the economy slipping into a recession.
Walmart’s Impressive Earnings
Walmart’s stock surged 6.6% after the retail giant reported a beat-and-raise quarter. The company not only exceeded earnings expectations but also raised its guidance for the next few quarters. Brian Mulberry, client portfolio manager at Zacks Investment Management, highlighted Walmart’s ability to raise guidance as a key differentiator from other national retailers like Home Depot, which had strong results but lowered expectations due to a weaker consumer outlook.
Cisco Systems’ Strong Performance
Cisco Systems was the best-performing stock in the Dow Jones Industrial Average, gaining 6.8% after reporting higher-than-expected earnings and revenue for its fiscal fourth quarter. The company also announced its second round of layoffs this year. Oppenheimer analyst Ittai Kidron expressed optimism about Cisco’s long-term prospects, citing continued enterprise improvement and demand for artificial intelligence (AI) infrastructure.
Ulta Beauty Gets a Buffett Boost
Ulta Beauty’s stock soared 11.2% after it was revealed that Warren Buffett’s Berkshire Hathaway had initiated a stake in the cosmetics retailer. The holding company purchased approximately 696,000 shares in the second quarter. Oppenheimer analyst Rupesh Parikh viewed this development as a vote of confidence in Ulta’s long-term prospects and a validation of its significantly discounted valuation.
Market Reaction
Wall Street reacted positively to the day’s news. The Nasdaq Composite outperformed, adding 2.3% to close at 17,594. The S&P 500 gained 1.6% to finish at 5,543, and the Dow Jones Industrial Average rose 1.4% to end the day at 40,563.
The combination of strong retail sales data and impressive earnings reports from major companies helped to boost investor confidence and drive the stock market higher.
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