Stocks opened sharply higher on Thursday and stayed there until the close. In addition to two encouraging earnings reports from blue chips, investors were also pleased with an upbeat retail sales report that helped calm recession rumors.
Let’s start with the results calendar. Cisco systems (CSCO) was the best Dow Jones stocks today, up 6.8% after the networking equipment specialist reported higher-than-expected earnings and revenue in its fiscal fourth quarter. Cisco also announced layoffs – the second round of job cuts this year.
Oppenheimer Analyst Ittai Kidron (Outperform, the equivalent of Buy) sees an attractive starting position for Cisco in the new fiscal year as the company continues to advance and demand for artificial intelligence (AI) infrastructure increases. “Although solid execution is still needed to win back investors, the results make us optimistic about the long-term opportunities,” he adds.
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Walmart gains share price after quarterly outperformance
Walmart (WMT) landed just behind CSCO on the price charts, gaining 6.6% after the discount retailer beat expectations and increased its share price in a quarter.
“Walmart stands out this quarter simply because of its ability to raise its forecast for the next few quarters,” says Brian MulberryClient 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 we have worked very hard to cautiously temper expectations due to weaker consumers.”
Ulta receives major Buffett support
Elsewhere in retail Ulta Beauty (ULTA) rose 11.2% after regulatory filings showed the cosmetics retailer is one of the newest entrants in the Berkshire Hathaway stock portfolio.
In fact, Warren Buffett’s holding company bought about 696,000 ULTA shares in the second quarter to build a stake. The position is small, representing only 0.1% of the total portfolio.
“We view this development as a vote of confidence in the company’s longer-term prospects and as further confirmation of ULTA’s significantly lower valuation,” says Oppenheimer analyst Rupesh Parikh (Outperform). Here is the complete list of stocks Buffett bought and sold in the second quarter.
Retail sales recover in July
It wasn’t just the news about individual stocks that made headlines today. There was a lot on the Economic calendar also difficult for investors to digest. Data from the Census BureauFor example, data showed that retail sales rose 1% in July, recovering from a downwardly revised 0.2% decline in June. The 0.3% increase significantly exceeded the increase economists had expected.
“Today’s retail sales figures far exceeded expectations, but more importantly, they should (at least for now) dispel any doom and gloom scenarios voiced earlier this month,” said Chris ZaccarelliChief Investment Officer at Independent Advisor Alliance, in a statement.
Better than expected economic data means that the Fed can probably start its rate-cutting cycle without the economy going into a recessionadds Zaccarelli.
Wall Street was pleased with the day’s positive headlines. Nasdaq-Composite exceeded with an increase of 2.3% to 17,594. S&P500 rose by 1.6% to 5,543 and the Dow Jones Industrial Average rose by 1.4% to 40,563.
