Walmart shares rose 8.4% after the retail giant delivered another strong earnings report that beat revenue and profit estimates and raised its full-year guidance. Investors viewed the earnings report and the improved retail sales data released around the same time as confirmation that a slowdown in consumer spending is not yet on the horizon.

Walmart’s second-quarter fiscal 2025 sales rose 4.8%, representing quarterly revenue of more than $169 billion. Comparable store sales, a gauge of consumer demand watched by most analysts, rose 4.2% in the U.S., compared to 3.8% in the first quarter.

The biggest contributor to profits was e-commerce sales, which grew by 21%. The company was able to reduce delivery costs per order by 40% in the second quarter, which contributed to a 0.43% improvement in consolidated gross margins. Walmart executives emphasized that the use of generative AI was one of the factors behind the growth of online sales.

“The GenAI product we use has helped us understand the attributes and properties of hundreds of millions of items, which, as I said, would have taken 100 times longer if we had tried to do it manually,” said John Furner, president and CEO of Walmart US. “We can tailor the catalog to their intent much more effectively because the detail of each item and the product display pages has gotten so much better.”

Grocery, which accounts for about 60 percent of Walmart’s U.S. sales, continued to help the retailer gain market share and shoppers across all income brackets. The company has maintained its strategy and philosophy of being the low-price seller of everyday goods and increased discounts last quarter. Walmart cut prices on 7,200 items, with the number of discounts on groceries increasing 35 percent. “We’re not seeing weaker consumers overall,” Chief Executive Doug McMillon said on a conference call with analysts. “They want value. They want a wide range of items and services.”

International sales rose 8.3%, led by gains in Mexico and China. Unlike global brands that showed weakness in consumer demand in China last quarter, Walmart’s comparable sales growth in the region rose 13.8%, mainly due to strength in Sam’s Club and e-commerce. “In China, we increased e-commerce orders delivered within one hour by 28% to 59 million orders,” said John Rainey, Walmart’s executive vice president and chief financial officer. Similar to the U.S., Chinese consumers appear to be seeking both value and convenience in a challenging economic environment.

Walmart’s positive results were in line with overall U.S. retail sales released around the same time. U.S. retail sales rose 1% in July, well above the 0.3% increase expected by most economists. July’s increase was the largest in nearly two years and eased investor fears about a slowdown in consumer spending.

Consumer spending is, of course, closely tied to the health of the labor market. With the recent rise in the unemployment rate, traders are concerned that retail spending is increasingly vulnerable. The jobless claims data, released at the same time as the retail sales report, was another positive. Jobless claims came in lower than expected over the past two weeks, surprising most economists and fueling the rise in stocks.

After last week’s volatility in the stock market, the economic data and Walmart’s surprise earnings beat are welcome news for nervous investors. This week’s positive developments also suggest that the recent market correction was a result of typical seasonal weakness combined with a general unwinding of overcrowded positions. So for now, investors can breathe a sigh of relief.