The New York Stock Exchange regained consumer confidence on Tuesday, helped by better-than-expected retail results that pushed the Dow Jones higher at the expense of technology.
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According to the final results at the close, the Dow Jones index was up 0.71% to 34,152.01 points and the broader S&P 500 index was up 0.19% to 4,305.20 points, while the tech-heavy Nasdaq was up 0.19% to 13,102 .55 points fell.
In a sluggish August session, investors were pleasantly surprised by announcements from retail giants Walmart and Dow Jones heavyweights Home Depot, and bet on consumer-related stocks.
America’s number one supermarket, Walmart, has finally revised up its full-year profit forecast, three weeks after issuing a profit warning that rocked financial markets. The stock rose 5.10% to $139.36.
The group said it expects annual operating profit to fall by 9% to 11%, down from the 11% to 13% previously expected, a rebound driven by big rebates that have encouraged the sale of excess inventory as well as price hikes on other products .
Other retail stocks such as Target Stores (+4.55%) and semi-wholesale chain Costco (+1.33%) gained momentum. Amazon, a major online retailer, was also up 1.12% to $144.78.
Home Depot was also in high demand (+4.05% to $327.35), as the home improvement chain reported on-expected quarterly results and felt reassured by solid demand for household items.
“We can’t say that Walmart’s results were exceptional, but they were better than expected and Wall Street was too bearish,” said Gregori Volokhine, portfolio manager at Meeschaert Financial Services.
“Everyone depended on energy and nobody on distribution. We buried the consumer 50 times, but 49 times we shouldn’t have done that,” he said.
“As long as there is full employment, that inflation — even if it keeps galloping — slows down or could be offset by wage increases, that’s where the consumer is staying, especially at Walmart,” the analyst told AFP.
The consumer (+1.21%) and discretionary spending (+1.09%) sectors led the market.
As a pendulum effect, the tech-dominated Nasdaq, which led the stock rally over the past month, lost some ground.
“Eventually those who had done well on the Nasdaq and found themselves underexposed in perhaps less exciting growth sectors like retail or consumer corrected their positions,” said Mr. Volokhin.
“We’ve seen a bit of profit-taking” on technologies “that make it possible to invest in the sectors that are recovering today.”
Meta (-0.79%), Netflix (-1.37%), Tesla (-0.89%) closed in the red.
On the macro front, the housing market looked gray again (-0.42% bottom of the Wall Street chart). Housing starts fell more than expected in July, falling 9.6% yoy. Building permits, which predict future construction, showed a slightly less alarming 1.6% decline.
On Wednesday, markets will follow minutes of the Fed’s most recent currency meeting in the “Minutes” released Wednesday to better gauge the Federal Reserve’s (Fed) stance on interest rates going forward.
In the bond market, Treasury bill yields declined very slightly, less than at the start of the session, to 2.81% versus 2.78% the previous day.
While the purchase of hearing aids without a prescription became possible in the USA on Tuesday, investors rushed to the titles of the affected manufacturers such as Eargo (+77.19% to $2.02).