The stock market rallied Tuesday after retail sales rose and investors waited for comments from Fed Chairman Jerome Powell that may provide clues on restraining inflation. Several semiconductor stocks bounced after a research report came out.
Indexes bounced from a morning fade. By early afternoon trading, the Nasdaq composite jumped 2% and the S&P 500 rose 1.7%. The Dow Jones Industrial Average added 1.1%. The small-cap Russell 2000 outshined the major indexes, gaining 2.7%.
Volume rose on the NYSE and Nasdaq compared with the same time on Monday.
Retail Sales Rise, Beating Estimates
Retail sales rose 0.9% in April and 0.6% excluding autos, slightly above the Econoday consensus estimates. It was the fourth-consecutive increase in U.S. retail sales.
U.S. Stock Market Today Overview
Last Update: 1:18 PM ET 5/17/2022
The Commerce Department also revised upward the prior month’s sales data. March sales rose 1.4%, up from the initial estimate of 0.5%, and ex-autos rose 2.1%, up from the 1.1% reported earlier.
“Excess savings, rising wages, strong job growth and some remaining pent-up demand for services are still propelling consumers forward, but it’s pretty clear that the highest inflation in four decades, equity market turmoil, and rising interest rates are taking a toll,” BMO Capital Markets senior economist Sal Guatieri noted.
The Fed’s Powell is holding an interview starting at 2 p.m. ET as the stock market tries to gauge the pace of monetary tightening.
Stock Market Watches Retailers
Walmart (WMT) stock dropped after the company reported earnings, while Home Depot‘s (HD) gains faded.
Walmart plunged more than 10% after the nation’s largest retailer missed April-quarter earnings expectations. Comparable sales rose 3% in the quarter. The number of U.S. transactions was flat but the amount spent on each climbed 3%.
Walmart stock is below a 152.10 buy point from an early April breakout, which triggers a sell signal.
Home Depot posted gains in first-quarter earnings and sales, surprising analysts who expected declines. Home Depot also raised full-year revenue guidance. The stock jumped at the open but then erased gains and, by early afternoon trading, shares were up 0.7%.
JD.com (JD) reported first-quarter results early Tuesday that beat revenue expectations despite China lockdowns. JD stock surged more than 2%. It’s trying to recapture the 50-day moving average.
The China internet giant reported an adjusted loss of 30 cents a share on revenue of $37.8 billion. Analysts expected JD to report adjusted income of 24 cents on revenue of $34.8 billion. Sales jumped 18% from the year-ago period.
“We have been implementing disciplined financial control policies while sparing no effort to support our consumers and business partners in this challenging time,” said Sandy Xu, JD.com’s chief financial officer.
It’s a big week of earnings for the retail sector, with Target (TGT) and Lowe’s (LOW) announcing results Wednesday morning.
Chip Stocks Gain On Research Report
Several chip stocks gained Tuesday after a research report said the stocks are looking more attractive following a sell-off earlier this year. Among them are Advanced Micro Devices (AMD), up 8% Tuesday, Alpha & Omega Semiconductor (AOSL), up 6% and Qualcomm (QCOM), up 3%.
Brokerage firm Piper Sandler said it is taking a “more positive stance” on the sector and upgraded AMD stock to buy. “While we are not trying to call the bottom, we believe investors should be buying semiconductor stocks at current levels,” Piper analyst Harsh Kumar said in a note to clients. “We are moving to a more positive stance on semiconductor stocks following our more cautious approach since the beginning of the year.”
Energy, mining and materials stocks also gained on Tuesday. Chile-based Sociedad Quimica y Minera (SQM) jumped 7% on the eve of reporting earnings results. Shares are extended and past their profit-taking range after rising from their 50-day moving average and 21-day exponential moving average.
SQM has gained both from the global shortage of lithium required in EV vehicles and from the fertilizer shortage brought on by the supply shock after Russia invaded Ukraine. Analysts expect it to earn $1.42 a share on sales of $1.42 billion in Q1.
Oil stocks Chevron (CVX) and Occidental Petroleum (OXY) both gained on reports that billionaire Warren Buffett-led Berkshire Hathaway increased its stake in both stocks. Gas pipeline stock Western Midstream Partners (WES) also gained 1.5%. The stock was Monday’s IBD 50 Stocks To Watch pick.
The Innovator IBD 50 ETF (FFTY) rose 1.8%. Aspen Technology (AZPN) led with an 11% jump to a new high. Aspen Technology stock leapt above a saucer-with-handle’s 168.99 buy point and is finding support above its 50-day line.
Follow Michael Molinski on Twitter @IMmolinski
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