Yahoo Finance Josh Schafer
Stock market today: S&P 500, Nasdaq rally to fully recoup losses from August sell-off
Updated
Stocks ripped higher Thursday as Wall Street took in signals that pointed to a still-strong US consumer and labor market. The Nasdaq Composite (^IXIC) popped more than 2.3%, while the benchmark S&P 500 (^GSPC) rose more than 1.6% and the Dow Jones Industrial Average (^DJI) rose about 1.4%, or roughly 550 points.
In focus early Thursday were earnings from retail giant Walmart (WMT), as well as monthly government retail sales data and an update on jobless claims. For its part, Walmart's stock surged more than 6% after a largely positive report in which it posted both earnings and revenue beats. The company also raised its full-year outlook.
Last month's retail sales, meanwhile, soared far past Wall Street's expectations in a sign that US consumers remain quite resilient. Retail sales rose 1% in July, above estimates for a 0.4% rise.
Also in focus is the normally routine update on weekly jobless claims. Last week, those claims fell more than forecast, sparking a market surge that has largely pervaded this week. And they fell again this week to 227,000, shafting expectations for a pickup, a key development as economists argue the jobs market is "where the action is going to be" for the Fed in the near future.
After a brutal start to August, stocks have been on a tear, including in Wednesday's session, after the Consumer Price Index posted its lowest year-over-year increase since early 2021. The S&P 500 and Nasdaq have now recouped all of their losses from a sell-off that began at the start of the month.
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Tech stocks are leading the market rally again
Stocks have roared back from their recent lows as recent economic data has cooled recession fears.
The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) are both in positive territory for the month despite a jobs report released in early August that fueled concerns about the health of the US economy and sparked a sell-off.
Since stocks sold off on Aug. 5, the S&P 500 is up almost 7% while the Nasdaq Composite is more than 8%. A look under the hood shows that once again, Big Tech is leading the charge higher.
The Information Technology (XLK) sector is up almost 12%. Nvidia (NVDA), the spark plug of the AI-infused bull market, is also up more than 21%.
- Josh Schafer
Walmart heads for record close after upbeat earnings forecast
Walmart stock rose more than 6% and was pacing for a record close on Thursday as investors digested an upbeat forecast from the retailer.
Yahoo Finance's Brooke DiPalma reports:
For its fiscal 2025, Walmart now expects sales to grow between 3.75% and 4.75%, with adjusted earnings per share coming in between $2.35 and $2.43. That's compared to previous guidance of net sales growing on the higher end of 3% to 4%, and adjusted earnings per share in the range of $2.23 to $2.37.
In Q2, revenue grew 4.8% to $169.34 billion, compared to the $168.46 billion expected. Adjusted earnings also beat estimates at $0.67 per share, a 9.8% year-over-year increase.
"Each part of the business is growing," CEO Doug McMillon said in the release. "Store and club sales are up, eCommerce is compounding as we layer pickup and even faster growth in delivery as our speed improves."
He added that the retailer's online marketplace, membership model, and ad business (which grew 26% globally) helped to diversify its profits.
US same-store sales are up 4.3%, including a 4.2% increase for its namesake Walmart business, and a 5.2% jump for Sam's Club.
Groceries remain a key business, a major factor behind the higher foot traffic and ticket sizes.
"We know that they're looking for value and their dollars are stretched, they're focusing in on those things that are providing value for them, they're being choiceful when they buy the larger ticket items," CFO John David Rainey told Yahoo Finance.
- Alexandra Canal
Paramount shares jump as another bidder enters the race
Shares of Paramount Global (PARA) jumped more than 8% on Thursday after Bloomberg reported Edgar Bronfman Jr., the heir to Canadian conglomerate Seagram Company, is close to making an offer for the media giant.
According to the outlet, Bronfman is interested in purchasing National Amusements, the holding company that controls Paramount. He is also reportedly weighing an investment in Paramount itself.
The potential bidding war comes as Paramount prepares its balance sheet for an expected merger with Skydance Media, which is expected to be completed in the third quarter of 2025.
At the time of the agreement, both companies agreed to a 45-day "go shop" period in which other individuals and business entities could submit potential bids.
Skydance, which will be valued at $4.75 billion following the all-stock deal's completion, said it would inject $6 billion in cash into Paramount, with $1.5 billion going directly into its debt-ridden balance sheet.
Skydance CEO David Ellison will become chairman and CEO of the combined company, while former NBCUniversal executive Jeff Shell, who was ousted last year over what NBC parent Comcast (CMCSA) deemed an "inappropriate relationship" with a female employee, will serve as president.
Earlier this week, the company announced it would shut down its storied TV studio by the end of the week, the latest move in a series of aggressive cost cuts.
The development comes as Paramount reported a sharper slowdown than analysts expected in its linear TV business and the company took a nearly $6 billion write-down on the value of its cable unit.
At the same time, the media giant announced plans to lay off 15% of its US workforce after eliminating about 800 positions in February. The layoffs kicked off Tuesday.
- Josh Schafer
Ulta rises more than 12% after Buffett buys
Ulta (ULTA) stock rose more than 12% on Thursday after Warren Buffett’s Berkshire Hathaway added a small stake in the beauty company.
Berkshire added 690,106 shares of Ulta in the second quarter, according to Berkshire's most recent 13F filing released Wednesday after the market close. The value of the investment as of Wednesday's close was about $227 million.
Ulta stock had been down more than 30% year to date.
- Josh Schafer
Jobless claims data shows 'softening' but not weak labor market
New data from the Department of Labor showed there were 227,000 initial jobless claims filed in the week ending Aug. 10, down from 234,000 the week prior and below the 235,000 economists had expected.
Notably, the data continued a recent trend of weekly claims falling off an 11-month high as investors have been closely following signs of slowing in the labor market following a weaker-than-expected July jobs report.
Economists said claims retreating to their lowest level since the start of July likely marks the end of claims rising due to impacts from Hurricane Beryl in Texas.
"This week's print indicates that we have finally moved into a normalized environment with claims no longer exhibiting impacts from the Hurricane," Jefferies US economist Thomas Simons wrote in a note to clients.
Oxford Economics senior economist Nancy Vanden Houten pointed out the data likely supports a Fed rate cut in September but not a drastic cut due to weakness in the labor market.
"We never want to read too much into one week's claims report, but the data are consistent with our view that while the labor market is softening it isn't weak enough to warrant more than a 25bps rate cut at the Fed's September meeting," Vanden Houten wrote in a note on Thursday.
- Dani Romero
Mortgage rates rose slightly as investors eye rate cuts
Mortgage rates ticked up slightly from the previous week as investors continue to expect the Federal Reserve to cut interest rates next month.
The average rate on the 30-year fixed-rate mortgage ticked up to 6.49% from 6.47% last week, Freddie Mac reported on Thursday, marking its lowest level in more than a year. A year ago, the average rate on a 30-year fixed-rate loan was 7.09%.
Separately, the average rate for the 15-year fixed mortgage was 5.66%, up from 5.63% a week prior. The rate on a 15-year loan was 6.46% a year ago.
“While rates increased slightly this week, they remain more than half a percent lower than the same time last year,” Sam Khater, Freddie Mac’s chief economist, wrote in a statement.
“In 2023, the 30-year fixed-rate mortgage nearly hit 8 percent, slamming the brakes on the housing market. Now, the 30-year fixed-rate hovers around 6.5 percent and will likely trend down in the coming months as inflation continues to slow. Lower rates are good news for potential buyers and sellers alike.”
Despite this week's uptick, the recent downward trend in rates has spurred some activity in the market. Applications to purchase a home increased by 3% from the previous week but still are 8% lower than the same week a year ago, per data from the Mortgage Bankers Association (MBA) released Wednesday.
Meanwhile, homeowners are capitalizing on the opportunity to restructure their existing loans.
Applications to refinance a home loan surged 35% from the previous week and were 118% higher than the same week a year ago, according to MBA, the strongest weekly gain since May 2022.
- Josh Schafer
Stocks rip toward session highs
The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) hit their highs of the day just after noon ET on Thursday.
The benchmark S&P 500 was up more than 1.4% while the Nasdaq Composite popped over 2.1%.
Inside the S&P 500, Technology (XLK) and Consumer Discretionary (XLY) led the rally, with both rising more than 2.6%.
Below is a look at the sector action midway through the trading day.
Source: Yahoo Finance - Josh Schafer
The 'soft landing' narrative returns as investors eye a 25 basis point rate cut in September
A little more than a week ago, stocks were in free fall. The July jobs report showed weakness emerging in the labor market, fueling fears that the Federal Reserve may be behind the curve in cutting interest rates.
Markets quickly moved to price in four rate cuts for this year, likely starting with a 50 basis point cut in September. Some even speculated the Fed may need to step in and provide an emergency rate cut before its next meeting.
Economists warned the market may have gotten ahead of itself and that one July jobs report might not tell the whole story of the US economy right now.
And through a busy week of economic data, those economists have been proven right. The latest data prints have shown inflation continues to fall toward the Fed's 2% goal while consumer spending holds up and layoffs aren't ticking higher.
"All of a sudden, things have come together," BMO Wealth Management US chief investment officer Yung-Yu Ma told Yahoo Finance. "And what seems like almost a Goldilocks scenario for the data is a tremendous shift from what we had a week or so ago when we had the market sell-off."
He added, "We think the soft landing is firmly in place."
The strong report on spending, combined with the data showing lower-than-expected unemployment claims, prompted investors to scale back their call for the Fed to begin easing policy aggressively.
As of Thursday morning, markets were pricing in a roughly 75% chance the Federal Reserve cuts interest rates by 25 basis points. A week ago, the market had been favoring a 50 basis point cut from the Fed amid concerns of an imminent economic downturn.
"The Fed should start normalizing policy soon with modest, gradual cuts, but there is no sign that the economy is in need of significant accommodation," Jefferies US economist Tom Simons wrote in a note to clients on Thursday.
- Josh Schafer
The Nasdaq 100 has recovered all of its losses from early August
After a volatile few weeks of trading, stocks have essentially made a round trip over the past two weeks as investor sentiment has whipsawed from recession fears to feeling like the US economy may still be on solid ground.
With a more than 1.6% gain today, Charles Schwab senior investment strategist Kevin Gordon pointed out on X, formerly known as Twitter, that the Nasdaq 100 (^NDX) is now flat for the month of August.
The NASDAQ 100 has erased its August decline pic.twitter.com/fdjYyztP29
— Kevin Gordon (@KevRGordon) August 15, 2024
- Dani Romero
Builders' confidence sinks further amid high mortgage rates
In August, homebuilder sentiment hit the lowest level since December as high interest rates and record home prices continue to curb buyer appetite for new homes.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) fell to 39 in August, down two points from July’s revised figure of 41. Economists polled by Bloomberg were anticipating a reading of 43.
Any number under 50 indicates that more builders view conditions as poor than good.
“Challenging housing affordability conditions remain the top concern for prospective home buyers in the current reading of the HMI, as both present sales and traffic readings showed weakness,” NAHB chairman Carl Harris, a custom homebuilder from Wichita, Kan., wrote in a statement.
The drop in builder confidence comes as mortgage rates have fallen to their lowest level in over a year. The average rate on the 30-year fixed-rate mortgage dropped to 6.47% from 6.73% last week, Freddie Mac reported last Thursday. New data will be out at noon today.
However, the NAHB reported that about three-quarters of the responses for the August survey were collected during the first week of the month when mortgage rates were hovering above 6.7%.
As a result, builders cut home prices to boost sales in August, with 33% of builders reporting slashing home prices, the highest share so far this year and up from 31% in July. Meanwhile, the use of sales incentives increased to 64% in August from a reading of 61% in July, marking the highest level since April 2019.
“With current inflation data pointing to interest rate cuts from the Federal Reserve and mortgage rates down markedly in the second week of August, buyer interest and builder sentiment should improve in the months ahead,” NAHB chief economist Robert Dietz wrote in the press release.
- Josh Schafer
Fresh economic data fights back against recession fears
Multiple data releases on Thursday morning showed signs of strength in the US economy after a weak July jobs report had fueled fears that the US economy could be headed into a downturn.
Retail sales surpassed Wall Street's estimates in July, helping ease concerns of a significant slowdown in the US economy. Retail sales rose 1% in July. Economists had expected a 0.4% increase in spending, according to Bloomberg data.
Meanwhile, initial filings for unemployment insurance fell more than expected last week. New data from the Department of Labor showed there were 227,000 initial jobless claims filed in the week ending Aug. 10, down from 234,000 the week prior and below the 235,000 economists had expected.
Stock futures popped on the news, with futures tied to the major averages rising nearly 1%.
- Brian Sozzi
Impressive quarter out of Walmart
Walmart stock (WMT) is on the move higher after another solid quarter.
Two things I am thinking about ahead of my chat live on Yahoo Finance at 9:10 a.m. ET with Walmart CFO John David Rainey.
First, Target's (TGT) earnings numbers next week will likely not be good. Walmart is calling out another strong quarter in food and weakness in the discretionary categories Target is known for.
And second, Walmart's international business has really turned the corner. Don't sleep on this business being a real nice profit tailwind in 2025.
