Dow, S&P 500 finish higher again on strong earnings from Walmart, Home Depot; Nasdaq dips

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Despite a choppy overall session, the Dow recorded its fifth consecutive day of gains on Tuesday, thanks to strong earnings from retail bellwethers Walmart and Home Depot. The S&P 500 also managed the push higher again, extending a recent upswing and closing above 4,300.

The Nasdaq lagged behind amid a lackluster session for technology, eventually finishing the session with a mild loss.

The Nasdaq (COMP.IND) ended -0.2%, the S&P 500 (SP500) finished +0.2% and Dow (DJI) closed +0.7%.

The S&P 500 recorded its highest close since late April, edging up by 8.06 points to finish at 4,305.20. The Dow Jones led Tuesday’s advance, climbing 239.57 points to end at 34,152.01. The Nasdaq slipped 25.50 points to close at 13,102.55.

Six of the 11 S&P 500 sectors ended with gains. Consumer Discretionary and Consumer Staples were the best performing segments, both rising more than 1%. Info Tech and Communication Services posted fractional declines.

Retail earnings provided a highlight for the day, with Walmart moving higher after the firm topped estimates with its Q2 earnings report. Home Depot advanced as well following solid results and guidance. HD did face some early skepticism amid concern about a jump in inventories, but eventually managed to push higher

On an economic front, Housing Starts fell 9.6% in July to 1.44M, lower than the anticipated 1.54M. July Building Permits gained 1.67M versus the expected 1.65M.

“The NAHB housing index, released yesterday, signaled ongoing weakness,” UBS chief economist Paul Donovan said. “There is underlying demand for housing (the US population is growing). However, while existing homeowners have experienced falling costs in recent years, the costs for a new homeowner have risen.”

Also, July Industrial Production data came in at 0.6%, ahead of the forecasted 0.3%.

“The US is not as important a manufacturer as it used to be, but it does still matter to global supply,” Donovan said. “However, the economic debate has rather shifted from the supply side to concerns about the level of demand. It is the consumer who stands on the dividing line between slowdown and slump.”

Fed funds future still lean to a 50-basis-point rate hike next month.

Rates ended higher. The 10-year Treasury yield (US10Y) edged up 2 basis point to 2.81% and the 2-year yield (US2Y) rose 7 basis points to 3.27%.

There has been a “shift in the dominant narrative over the last couple of weeks, when there had actually been a small but growing hope that central banks might be able to execute a soft landing, not least after the much stronger-than-expected U.S. jobs report for July,” Deutsche Bank’s Henry Allen wrote. “But ultimately, a number of leading indicators are still moving in the wrong direction, and yesterday’s releases served as a reminder that hard landings have historically been the norm when starting from a position as unfavorable as the present one.”

Elsewhere, amid 13F season many big-name funds took growth-stock stakes amid the Q2 downturn.

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