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Stock Market News for Aug 17, 2022

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Wall Street closed mixed on Tuesday as market participants continued to assess the health of the U.S. economy. Major economic data released yesterday were also mixed. The Dow and the S&P 500 ended in positive territory while the Nasdaq Composite finished in red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) advanced 0.7% or 239.57 points to close at 34,152.01.  This marked the blue-chip index’s highest close since Apr 21 and first closing since the key technical barrier of 34,000 since May 4. Notably, 21 components of the 30-stock index ended in positive territory while 9 in red.

The tech-heavy Nasdaq Composite finished at 13,102.55, dropping 0.2% due to weak performance of large-cap technology stocks. The S&P 500 rose 0.2% to end at 4,305.20. The broad-market index closed above a key technical barrier of 4,300 for the first time since Apr 21.

Seven out of the 11 broad sectors of the benchmark index closed in positive zone while four in red. Each of the Consumer Staple Select Sector SPDR (XLP) and the Consumer Discretionary Select Sector SPDR (XLY) gained 1.1%.  

The fear-gauge CBOE Volatility Index (VIX) was down 1.3% to 19.39. A total of 10.92 billion shares were traded Tuesday, lower than the last 20-session average of 10.96 billion. Advancers outnumbered decliners on the NYSE by a 1.22-to-1 ratio. On Nasdaq, a 1.21-to-1 ratio favored declining issues.

Solid Retail Sector Earnings

We are at the last leg of the second-quarter 2022 earnings season. So far, the results are better-than expected. The sole major sector that is yet to report fully is the retail sector. Market participants were concerned how this sector had performed in the last quarter as a few retail giants have given warning regarding weak consumer spending.

However, yesterday, two retail behemoths Walmart Inc. (WMT - Free Report) and The Home Depot Inc. (HD - Free Report) reported strong results bringing a rally in the Dow index.

Walmart reported second-quarter fiscal 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate and the former increased year over year. The company’s adjusted earnings of $1.77 per share surpassed the Zacks Consensus Estimate of $1.60. Total revenues of $152.9 billion beat the consensus mark of $151.4 billion. (Read More)

The Home Depot has posted second-quarter fiscal 2022 results, wherein earnings and sales beat the Zacks Consensus Estimate. The company’s earnings of $5.05 per share surpassed the Zacks Consensus Estimate of $4.95. Net sales of $43,792 million beat the Zacks Consensus Estimate of $43,346 million. (Read More)

Consequently, shares of Walmart and The Home Depot surged 5.1% and 4.1% respectively. The Home Depot carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Department of Commerce reported that housing starts dropped 9.6% in July to a seasonally adjusted 1.446 million units, marking the lowest level since February 2021. The consensus estimate was 1.534 million units. Year over year, housing starts fell 8.1% in July. The data for June was revised upward from 1.559 million units to 1.599 million units.

Building permits for new home dropped 2.1% in July to a seasonally adjusted 1.674 million units. However, the consensus estimate was 1.648 million units. The data for June was revised upward from 1.685 million units to 1.696 million units.

Federal Reserve reported that Industrial Production rose 0.6% in July, beating the consensus estimate of 0.3%. June’s data was revised upward from a drop of 0.2% to a break even. Moth over month, manufacturing output rose 0.7%, utilities output fell 0.8% and mining output gained 0.7%.

Capacity utilization in July increased to 80.3%, beating the consensus mark of 80.1%. Capacity utilization in June was revised marginally downward to 79.9% from 80% reported earlier.

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