Stock Market Today: Stocks Soar on Retail Sales, Walmart Earnings

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Stocks opened sharply higher Thursday and stayed there through the close. In addition to a pair of encouraging blue chip earnings reports, investors also cheered an upbeat retail sales report, which helped quiet recession chatter.

Starting with the earnings calendar. Cisco Systems (CSCO) was the best Dow Jones stocks today, gaining 6.8% after the networking equipment specialist reported higher-than-expected earnings and revenue in its fiscal fourth quarter. Cisco also announced layoffs – its second round of job cuts this year.

Oppenheimer analyst Ittai Kidron (Outperform, the equivalent of Buy) sees an attractive setup for Cisco in its new fiscal year amid continued enterprise improvement and demand for artificial intelligence (AI) infrastructure. "While solid execution is still needed to win back investors, the results leave us optimistic on the long-term opportunity," he adds.

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Walmart pops after beat-and-raise quarter

Walmart (WMT) finished just behind of CSCO on the price charts, jumping 6.6% after the discount retailer's beat-and-raise quarter.

"Walmart stands out in this quarter simply for its ability to raise guidance for the next couple of quarters," says Brian Mulberry, client portfolio manager at Zacks Investment Management.

Mulberry adds that Walmart's report contrasts with other national retailers such as Home Depot (HD, +1.2%) that had strong results "but worked very hard to delicately lower expectations on the heels of a weaker consumer."

Ulta gets a big Buffett boost

Elsewhere in the retail space, Ulta Beauty (ULTA) surged 11.2% after regulatory filings revealed the cosmetics retailer is one of the newest additions to the Berkshire Hathaway equity portfolio.

Indeed, Warren Buffett's holding company bought roughly 696,000 ULTA shares in the second quarter to initiate a stake. The position is a small one, accounting for just 0.1% of the entire portfolio.

"We view this development as a vote of confidence for the company's longer-term prospects and a further validation of ULTA's significantly discounted valuation," says Oppenheimer analyst Rupesh Parikh (Outperform). Here is the entire list of all the stocks Buffett bought and sold in Q2.

Retail sales rebound in July

It wasn't just single-stock news making headlines today. There was plenty on the economic calendar for investors to digest as well. Data from the Census Bureau, for instance, showed that retail sales were up 1% in July, rebounding from June's downwardly revised 0.2% decline. This easily beat the 0.3% increase economists expected.

"Today's retail sales numbers were a blowout versus consensus, but more importantly, it should lay to rest (at least for the moment) all of the doom and gloom that was expressed at the beginning of this month," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, in a statement.

Better-than-expected economic data means the Fed can likely start its rate-cutting cycle without the economy entering a recession, Zaccarelli adds.

Wall Street cheered today's positive headlines. The Nasdaq Composite outperformed, adding 2.3% to 17,594. The S&P 500 gained 1.6% to 5,543 and the Dow Jones Industrial Average rose 1.4% to 40,563.

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With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.