Dow Jones and S&P 500: US Stocks Climb as Inflation Eases, Walmart Leads Gains

Stock Futures Rise as Inflation Concerns Ease

Stock futures moved higher on Thursday morning as investors grew more confident due to signs of easing inflation. The Dow Jones Industrial Average has climbed 1.3% so far this week, while the S&P 500 has gained around 2%, and the Nasdaq Composite has advanced nearly 2.7%.

At 11:26 GMT, Dow Futures are trading 40211.00, up 92.00 or +0.23%. S&P 500 Index Futures are at 5483.50, up 6.50 or +0.12% and Nasdaq-100 Index Futures are trading 19144.25, up 29.25 or 0.15%.

Walmart Drives Early Market Gains

Walmart added to the market’s positive momentum after reporting earnings that surpassed expectations and raising its outlook for the year. The retailer’s shares rose over 5% in premarket trading, supported by a nearly 5% increase in revenue. Walmart now projects sales growth between 3.75% and 4.75% for the year, with adjusted earnings per share expected to range from $2.35 to $2.43.

Chief Financial Officer John David Rainey noted that consumer spending has remained stable, with customers focusing on essential purchases while showing no signs of financial strain. Walmart also reported its first positive sales growth in general merchandise in 11 quarters, signaling a potential shift in consumer behavior.

Other Stocks in Focus

Several other stocks made notable moves in after-hours trading. Cisco Systems saw its shares jump over 5% after the company announced better-than-expected earnings and revenue for its fiscal fourth quarter, alongside plans to reduce its global workforce. This earnings beat added further confidence in the tech sector’s resilience.

Meanwhile, Ulta Beauty shares surged more than 13.5% following news that Warren Buffett’s Berkshire Hathaway took a new stake in the cosmetics retailer. This significant investment reflects confidence in Ulta’s growth prospects, particularly in a challenging retail environment.

Nike shares also gained about 3% after Bill Ackman’s Pershing Square revealed a position in the company. The move by a high-profile investor like Ackman suggests a strong belief in Nike’s potential for long-term growth, despite recent market volatility.

Inflation Data Boosts Investor Confidence

Recent inflation data has played a key role in boosting market sentiment. The U.S. consumer price index (CPI) increased by 2.9% year-over-year in July, marking the lowest inflation level since March 2021. This moderation, along with a slower-than-expected rise in wholesale prices, has reassured investors that the Federal Reserve may be able to manage the economy without triggering a recession. Many now anticipate that the Fed could lower interest rates at its September meeting, further supporting equity markets.

Market Outlook: Continued Optimism Expected

Given Walmart’s strong earnings report, the positive moves in other key stocks, and the encouraging inflation data, a positive sentiment is likely to continue in the near term. Investors will be paying close attention to upcoming retail sales data for further insights into consumer behavior, but current trends suggest that the equity markets could maintain their upward momentum. A potential interest rate cut by the Federal Reserve in September could provide additional support for further gains.

Technical Analysis

E-mini S&P 500 Index futures are grinding higher on Thursday, putting it in a position to challenge the 50-day moving average at 5510.00. Although there could be some profit-taking on the first test of this indicator. However, it’s also the trigger point for an acceleration to the upside with 5600.75 the next near-term target.

On the downside, support is the 5721.25 to 5120.00 pivot at 5420.50.