The stock market enjoyed a broad rebound Tuesday as fresh economic data suggested the U.S. consumer is still shopping strong.
The U.S. Census Bureau said today that April retail sales improved by 0.9% over March. Though that was slightly less than the 1.0% expected, there was a show of strength in the significant upward revision to March's numbers, to 1.4% growth from 0.5% originally.
"To the extent that markets are worried about a growth slowdown, this is good news, but it is also a further catalyst for the Fed to raise rates even higher to get inflation under control," says Chris Zaccarelli, chief investment officer for registered investment advisor Independent Advisor Alliance.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
While Zaccarelli joins other names in believing a recession is unlikely in 2022, "the Fed is going to need to raise interest rates to a point where they are likely to cause a recession in 2023 or 2024, and that gives us cause for concern," he says.
Despite the promising retail data, success in retail stocks wasn't a gimme.
Walmart (WMT, -11.4%) plunged after delivering a mixed quarterly report. Revenues improved 2.4% year-over-year to $141.6 billion to easily top expectations, and Walmart lifted its full-year sales outlook. However, that windfall is coming from cost-conscious consumers flocking to its grocery aisle, which has lower margins than its other offerings. This, as well as supply-chain problems and other headwinds, caused Walmart to report profits of $1.30 per share that were well short of estimates, and to lower its income forecast for 2022.
Home Depot (HD, +1.7%) fared better, however, after delivering record fiscal first-quarter sales and upgrading its full-year outlook.
"Walmart's report this week basically confirmed all the negative scenarios that you would expect given inflationary pressures and rising interest rates," says David Keller, chief market strategist at StockCharts.com. But he added that "Home Depot's report had a much more encouraging tone as consumers fueled a strong earnings win for the company."
Other pockets of strength Tuesday included airline stocks such as American Airlines (AAL, +7.7%) and Delta Air Lines (DAL, +6.7%), which were boosted by United Airlines' (UAL, +7.9%) higher second-quarter revenue outlook. Semiconductor stocks including Micron Technology (MU, +5.7%) and Qualcomm (QCOM, +4.3%) also rallied around Piper Sandler's upgrade of Advanced Micro Devices (AMD, +8.7%).
The Nasdaq Composite was tops among the major indexes Tuesday, up 2.8% to 11,984. The S&P 500 delivered a 2.0% gain to 4,088, while the Dow Jones Industrial Average improved 1.3% to 32,654.
Other news in the stock market today:
- The small-cap Russell 2000 surged 3.2% to 1,840.
- U.S. crude oil futures slumped 1.6% to $112.40 per barrel.
- A retreat in the U.S. dollar helped gold futures tick 0.3% higher to $1,818.90 per ounce.
- Bitcoin improved by 1.7% to $30,058.48. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Twitter (TWTR, +2.5%) made some gains despite a potential deal with Tesla (TSLA, +5.1%) CEO Elon Musk looking increasingly unlikely. Musk insisted today that he would back out of his $44 billion bid to buy the social platform unless Twitter proved that fewer than 5% of its users are bots. He tweeted that "20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher" without providing proof. Numerous analysts have now said they believe Musk's sudden interest in Twitter's bot numbers is either an attempt to escape his deal, or lower the $54.20-per-share price tag.
Buffett's Latest Buys Are In!
A number of other stocks were driven higher Tuesday by their newfound inclusion into a prestigious order: the equity portfolio of Warren Buffett's Berkshire Hathaway.
Berkshire filed its quarterly Form 13F with the SEC yesterday afternoon, revealing that after more than a year of heavy selling, Warren Buffett was finally eager to buy. Paramount Global (PARA, +15.4%) and Celanese (CE, +7.5%) were just two of the eight new positions Berkshire entered during the first quarter, and among the top beneficiaries of earning Buffett's seal of approval.
We recently mentioned that inflation has been a major driver of many of Buffett's purchases of the past few months, but it's not the only story.
Read on as we explore each and every one of Buffett's 22 moves from the first quarter of 2022, including what likely drew the Oracle of Omaha (or his lieutenants) to the position.
Disclaimer
Kyle Woodley was long AMD as of this writing.
-
How Lower Interest Rates Affect Your Finances: Credit Cards, Car Loans and MortgagesThe Fed's rate cut will provide relief for some borrowers, but savers will have to work harder to get decent returns.
-
Four Ways to Maximize Your 401(k) Contributions Before the Year EndsTo maximize your 410(k) contributions in 2024, assess how much you’ve contributed so far, check your employer’s match, take a look at your budget and consider increasing how much you set aside per paycheck.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
Why Walmart Stock's a Buy After Its Beat-And-Raise QuarterWalmart is the best Dow Jones stock Tuesday after the retail giant's solid earnings report and outlook and Wall Street thinks it's just getting started. Here's what they're saying.
-
Stock Market Today: Nasdaq Jumps Ahead of Nvidia EarningsIt was a mostly positive start to a new week of pricing in more Donald Trump.
-
Stock Market Today: Stocks Slip After Powell Talks Rate CutsThe main indexes closed lower Thursday after Fed Chair Powell said there's no rush to cut rates.
-
October CPI Report Hits the Mark: What the Experts Are Saying About InflationCPI While the current pace of rising prices appears to have leveled off, the expected path of rate cuts has become less certain.
-
Stock Market Today: Stocks Retreat on Renewed Inflation, Interest Rate QuestionsStocks were lower and yields were higher on Tuesday, with markets reflecting the uncertain transition from campaign promises to real-world policies.
-
Is Home Depot Stock Still a Buy After Its Beat-And-Raise Quarter?Home Depot stock is struggling for direction even after the retailer's strong earnings and full-year outlook, but Wall Street isn't worried. Here's what you need to know.
-
Stock Market Today: S&P 500 Tops 6K as Election Rally EnduresThe S&P 500 closed just below the 6,000 mark on Monday.
