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* Walmart sees smaller profit drop this year
* Home Depot beats sales estimates
* U.S. yields rise as retail data points to more Fed
* Indexes mixed: Dow gains 0.73%, S&P up 0.27%, Nasdaq off
Aug 16 (Reuters) - Strong earnings from Walmart and Home
Depot helped drive gains in the Dow Jones and the S&P 500
indexes on Tuesday.
Walmart Inc shares rose 5.9% after the world's
largest retailer also forecast a smaller drop in full-year
profit than previously projected.
Home Depot Inc added 5.4% as it surpassed estimates
for quarterly sales on steady demand from builders as well as
The two heavyweight stocks contributed to the S&P 500 retail
sector's 2.1% gain.
"These companies are beating reduced or at least modestly
reduced expectations," said Jason Pride, CIO for private wealth
"Arguably, it is unexpected to some degree to see the
magnitude of EPS strength being seen this quarter and even the
prior quarter in the face of the difficulty that consumers are
facing on the inflation in the rising rate environment."
So far, 77.6% of the S&P 500 companies that have reported
results as of Friday have topped analysts' estimates, according
to Refinitiv data.
Better-than-expected earnings from corporate America are
helping U.S. equities recoup losses from a recent
inflation-induced rout, with the tech-heavy Nasdaq index
bouncing nearly 24% off its mid-June lows.
Meanwhile, the 10-year Treasury yield recovered to 2.84% as
encouraging data from U.S. retail giants suggested that the
Federal Reserve has room to further tighten financial conditions
as it battles four-decade high inflation.
Traders are now seeing a 60% chance of a 50 basis-point hike
by the U.S. central bank in September and a 40% chance of a 75
That rise in yields weighed on high-growth stocks such as
Apple Inc and Alphabet Inc.
"The back and forth in markets is heavily driven by changing
expectations for rate hikes, which impacts stock prices," Pride
At 12:11 p.m. ET, the Dow Jones Industrial Average
was up 248.32 points, or 0.73%, at 34,160.76, the S&P 500
was up 11.50 points, or 0.27%, at 4,308.64, and the Nasdaq
Composite was down 20.10 points, or 0.15%, at 13,107.95.
Investor sentiment is still bearish, but no longer
"apocalyptically" so, according to BofA's monthly survey of
global fund managers in August.
Focus will be on retail earnings and retail sales data this
week for more clues on the impact of inflation on consumer
Zoom Video Communications fell 4.2% after Citigroup
cut its rating on the pandemic darling's stock to "sell".
Advancing issues outnumbered decliners by a 1.06-to-1 ratio
on the NYSE. Declining issues outnumbered advancers for a
1.28-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and 29 new
lows, while the Nasdaq recorded 67 new highs and 30 new lows.
(Reporting by Bansari Mayur Kamdar, Susan Mathew and Anisha
Sircar in Bengaluru; Editing by Shounak Dasgupta and Anil