Stocks close sharply higher as indexes claw back from sell-off

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U.S. stocks pushed higher Tuesday, buoyed by a rally in tech shares, as all three indexes clawed back from intense selling last week spurred by worries around persistent levels of inflation and the prospect of an economic slowdown.

Investors largely shrugged off hawkish remarks from Federal Reserve Chair Jerome Powell at a Wall Street Journal conference Tuesday that signaled the central bank was prepared to raise rates above neutral if needed in order to rein in elevated prices.

The S&P 500 gained 2%, and the Dow Jones Industrial Average jumped 400 points. The tech-heavy Nasdaq Composite advanced 2.8% as technology stocks rebounded from a down session Monday. The moves follow six straight weeks of declines for the S&P 500, its longest span of losses in more than a decade, and seven consecutive down weeks for the Dow Jones Industrial Average, the index’s widest period of weekly losses since 2001.

Elsewhere in markets, shares of Walmart (WMT) plunged 11.38% to $131.39 after a big earnings miss by the megastore. The retailer fell as much as 11.75% during intraday trading, marking its worst day since 1980. Walmart’s stock fell 11.68% during the 1987 market crash.

On the economics data front, retail sales climbed 0.9% in April, with consumer spending still holding up despite persistently high inflation.

“The desire to spend is strong among US consumers,” Harris Financial Group managing partner Jamie Cox said in a note. “Americans have broken the shackles of covid and aren’t going back. Numbers like this call into question any forecasts of a 2022 recession in the United States.”

Uncertainty around the pace and magnitude of the Federal Reserve’s rate hiking cycle has stoked pressure across markets that has persisted throughout the year. In 2022 so far, the S&P 500 is roughly 15% below its all-time high on Jan. 3, while the Dow is down about 11% over the same period and the Nasdaq has fallen deeper into a bear market – well over 20% below its record closing price in November.

“Markets lead the economy,” Citi Private Bank Chief Investment Officer David Bailin told Yahoo Finance. “The fact that markets are lower at this point means that the consumer is slowing, and the global economy is slowing.”

Equity markets have endured “severe technical damage” in recent months, with the S&P 500 falling below the important 4,000 level last Monday before testing bear market levels near 3,850 last Thursday, Comerica Wealth Management Chief Investment Officer John Lynch pointed out in an emailed note.

“Curiously, comments from Fed Chair Jerome Powell indicating the likelihood of economic pain in order to achieve the central bank’s objectives of lowering inflation may have been the catalyst for the S&P 500’s rally beginning Thursday afternoon and lasting through Friday’s close,” Lynch wrote. “Nevertheless, we caution investors that the severe technical damage suffered these past several months will take longer than a few good days to repair.”

Investors will have more Fedspeak to mull in the coming days, with speaking engagements from other central bank officials slated to take place through Friday.

“The inconvenient truth is the Fed is going to need to raise rates more quickly and to a higher level than many were hoping,” Independent Advisor Alliance Chief Investment Officer Chris Zaccarelli said recently in an emailed note. “There will be at least four 50 bps rate hikes this year and not three or less and we will continue to be cautious with risk assets.”

4:00 p.m. ET: S&P climbs 2%, Dow gains 400 points, Nasdaq jumps 2.8%

Here’s where the major indexes were trading at market open Tuesday:

  • S&P 500 (^GSPC): +80.92 (+2.02%) to 4,088.93

  • Dow (^DJI): +431.63 (+1.34%) to 32,655.05

  • Nasdaq (^IXIC): +321.73 (+2.76%) to 11,984.52

  • Crude (CL=F): -$2.13 (-1.87%) to $112.07 a barrel

  • Gold (GC=F): -$0.20 (-0.01%) to $1,813.80 per ounce

  • 10-year Treasury (^TNX): +9.1 bps to yield 2.9680%

9:44 a.m. ET: Retail sales rise 0.9% in April underscoring strength of US consumers

U.S. retail sales rose at a solid pace in April, pointing to continued strength in the U.S. economy, with consumer spending still holding up despite persistently high inflation.

The Commerce Department said Tuesday that U.S. retail sales rose 0.9% in April, buoyed by increased sales of cars, electronics, and at spending restaurants. Economists had anticipated an advance of 1.0%, according to Bloomberg consensus data.

“The desire to spend is strong among US consumers,” Harris Financial Group managing partner Jamie Cox said in a note. “Americans have broken the shackles of covid and aren’t going back. Numbers like this call into question any forecasts of a 2022 recession in the United States.”

9:30 a.m. ET: Stocks attempt comeback from heavy selling last week

Here’s where the major indexes were trading at market open Tuesday:

  • S&P 500 (^GSPC): +62.72 (+1.56%) to 4,070.73

  • Dow (^DJI): +450.12 (+1.40%) to 32,673.54

  • Nasdaq (^IXIC): +240.94 (+2.07%) to 11,903.73

  • Crude (CL=F): -$0.02 (-0.02%) to $114.18 a barrel

  • Gold (GC=F): +$11.30 (+0.62%) to $1,825.30 per ounce

  • 10-year Treasury (^TNX): +8.7 bps to yield 2.9640%

7:16 a.m. ET: Walmart Q1 earnings miss estimates while sales grow more than expected

Walmart (WMT) reported mixed first-quarter results, with still-solid consumer spending helping buoy the retail giant’s sales while earnings fell short of expectations.

Shares declined by more than 6% in pre-market trading.

The world’s largest retailer reported adjusted earnings per share of $1.30 compared to $1.48 expected by analysts, according to Bloomberg consensus estimates. Revenue came in at $141.57 billion versus $139.09 expected.

Walmart has seen sales growth decelerate from a peak rate during the height of the pandemic domestically, when a surge in pantry-stocking and stimulus checks helped boost results. Still, the company has maintained revenue growth as demand remained resilient for the company’s array of products, even as consumer prices have climbed across the country.

“Bottom-line results were unexpected and reflect the unusual environment,” Walmart’s president and CEO Doug McMillon said in a statement. “U.S. inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than we expected. We’re adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future.”

HOUSTON, TEXAS – AUGUST 04: A price-tag is shown at a Walmart store on August 04, 2021 in Houston, Texas. The cost of back-to-school items is on the rise due to a combination of delays in U.S. manufacturing and heightened consumer demand for goods. The steep increases are partially due to both elementary and college-aged students returning back to school after missing in-person class sessions during the pandemic. (Photo by Brandon Bell/Getty Images)

7:11 a.m. ET: Stock futures climb as investors digest retail earnings, economic data

Here were the main moves in early trading ahead of Tuesday’s open:

  • S&P 500 futures (ES=F): +63.00 (+1.57%) to 4,067.75

  • Dow futures (YM=F): +406.00 (+1.26%) to 32,565.00

  • Nasdaq futures (NQ=F): +232.74 (+1.90%) to 12,477.50

  • Crude (CL=F): +$0.68 (+0.60%) to $114.88

  • Gold (GC=F): +$11.50 (+0.63%) to $1,825.50 per ounce

  • 10-year Treasury (^TNX): 0.00 bps to yield 2.8770%

7:03 a.m. ET: Home Depot climbs 4% on heels of strong quarterly results

Shares of home improvement retailer Home Depot (HD) bounced in early trading Tuesday after the company unveiled first-quarter financial results that beat analyst estimates and raised its full-year outlook.

The company reported net income was $4.23 billion, or $4.09 per share, in the three months ended March 31, compared to $4.15 billion, or $3.86 per share in the same period last year. Home Depot also notched $38.9 billion in net sales for the first quarter of 2022, marking an increase of $1.4 billion, or 3.8% from a year ago. Analysts had anticipated adjusted earnings of $3.71 per share on revenue of $36.83 billion, according to Bloomberg consensus estimates.

“The solid performance in the quarter is even more impressive as we were comparing against last year’s historic growth and faced a slower start to spring this year,” Chief Executive Officer and president Ted Decker said in a statement.

The company also raised its full-year guidance, with sales growth expected to come in at 3% and earnings per share growth projected to come in at mid-single digits.

6:17 p.m. ET Monday: Stock futures little changed following narrow recovery in markets

Here’s where stock futures were in extended trading ahead of the overnight session Monday:

  • S&P 500 futures (ES=F): -1.00 (-0.02%) to 4,003.75

  • Dow futures (YM=F): -4.00 (-0.01%) to 32,155.00

  • Nasdaq futures (NQ=F): +4.50 (+0.04%) to 12,249.25

  • Crude (CL=F): -$0.51 (-0.45%) to $113.69

  • Gold (GC=F): +$10.20 (+0.56%) to $1,824.20 per ounce

  • 10-year Treasury (^TNX): -5.8 bps to yield 2.8770%

NEW YORK, NEW YORK - MAY 12: Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City. The Dow Jones Industrial Average fell in morning trading as investors continue to worry about inflation and other global issues.  (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – MAY 12: Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City. The Dow Jones Industrial Average fell in morning trading as investors continue to worry about inflation and other global issues. (Photo by Spencer Platt/Getty Images)

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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