Stocks started Tuesday on shaky ground before muscling higher thanks to a pair of well-received earnings reports from retail giants.
Walmart (WMT) stock jumped 5.1% after the mega-retailer reported higher-than-expected earnings and revenue for its second quarter. The company also reiterated its full-year guidance. This was particularly notable, given that operating income fell in Q2 amid an inventory glut and a shift by consumers toward necessities and away from higher-priced discretionary items.
Home Depot (HD, +4.1%) also beat on the top and bottom lines in its second quarter, and reaffirmed its full-year forecast. While the home improvement retailer said total customer transactions for the three-month period were down 3% year-over-year, the average receipt was up 9.1%.
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"Results from both Walmart and Home Depot suggest the consumer continues to be resilient," says Michael Reinking, senior market strategist at the New York Stock Exchange. "Seemingly, relief at the pump has helped on this front." Reinking adds that in terms of current consumer spending, Walmart highlighted a solid start to back-to-school shopping season, while Home Depot said home improvement spending is still strong despite signs of a weakening housing market. More retailers are scheduled on this week's earnings calendar, with Target (TGT, +4.6%) and Lowe's (LOW, +2.9%) set to report tomorrow.
The blue-chip earnings pushed the Dow Jones Industrial Average higher for a fifth straight day, rising 0.7% to 34,151 – its first close above 34,000 since early May. The S&P 500 Index also closed higher, up 0.2% at 4,305, while the Nasdaq Composite (-0.2% at 13,102) erased an early afternoon lead to end with a modest loss.
Other news in the stock market today:
- The small-cap Russell 2000 ended with a marginal loss at 2,020.
- U.S. crude futures fell 2.4% to $87.26 per barrel, their lowest close since January. "Crude prices are declining over fears China's growth could slow much more and on improving odds that the Iranian crude could flood the market as negotiators near a potential revival of the Iran nuclear deal," says Edward Moya, senior market strategist at currency data provider OANDA.
- Gold futures closed lower for a second straight day, shedding 0.5% to $1,789.70 an ounce.
- Bitcoin slipped 0.2% to $23,933.97. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Bed Bath & Beyond (BBBY) continued to climb, this time boosted by news RC Ventures, the venture capital firm owned by GameStop (GME) Chairman Ryan Cohen, bought 1.6 million out-of-the-money BBBY calls with strike prices between $60 and $80 (meaning the stock is expected to rally past these levels). At one point today, the meme stock was up more than 75% before ending the day with a 29.1% gain at $20.65.
- Snowflake (SNOW) gave back 1.8% after UBS Global Research analyst Karl Keirstead downgraded the cloud-based data platform to Neutral from Buy. The analyst says the stock's nearly 50% rally off its June lows has created a "less-favorable set-up given the macro headwinds, more checks citing a desire to trim discretionary data analytics spend and Snowflake’s customer profile, which (like AWS) includes a number of emerging tech/internet firms and pandemic beneficiaries that may be moderating spending growth."
Buffett's Q2 Buys and Sells
Warren Buffett spent most of Q2 adding to existing stakes in some of his favorite stocks. That's according to a Monday evening regulatory filing from Berkshire Hathaway (BRK.B), Buffett's holding company.
According to the Form 13F that was filed with the Securities and Exchange Commission (SEC) yesterday, Warren Buffett and his team continued to buy in the second quarter as the broader stock market sold off (the S&P 500 fell 16.5% in Q2).
Among the most notable positions added to in the Berkshire Hathaway equity portfolio were the purchase of another 3.9 million shares of Apple (AAPL) – the largest position by a mile. Buffett also increased his stake in another Dow Jones stock and aggressively purchased shares of Occidental Petroleum (OXY), leading some to speculate if the Oracle of Omaha is just going to buy the oil and gas firm outright. Read on as we take a closer look at all of Buffett & Co.'s buys and sells in the second quarter of 2022.
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