Dow, Nasdaq, S&P 500 rise on strong retail sales but Walmart hits 52-week low on warning

Damian J. Troise and Alex Veiga
Associated Press

NEW YORK (AP) — Stocks rose steadily throughout the day and ended with broad gains as traders got back to buying again after a mostly miserable few weeks on Wall Street.

Tech giants like Apple and Microsoft were among the biggest winners, and video game maker Take-Two Interactive jumped after forecasting better results than analysts were expecting. Paramount soared after Warren Buffett's Berkshire Hathaway disclosed a new stake in the media company.

The S&P 500 rose 2% and the tech-heavy Nasdaq added 2.8%. Small-company stocks rose more than the rest of the market, a signal investors are feeling bullish on the economy. Treasury yields rose.

The gains were broad and included retailers, health care companies and industrial firms. Amazon rose 2.6%. Abbott Laboratories rose 4% after the company made a deal with regulators to ramp up production of baby formula amid a shortage.

Banks gained ground along with rising bond yields, which they rely on to charge more lucrative interest on loans. The yield on the 10-year Treasury rose to 2.97% from 2.88% late Monday. JPMorgan Chase rose 2.7%.

Bond yields rise, stocks up on sign of strong consumer spending

The solid gains on Tuesday come as the broader market struggles to break a six-week long slump.

The Commerce Department said U.S. retail sales rose 0.9% in April. The solid increase was driven by higher sales of cars, electronics, and more spending at restaurants. The upbeat report helps allay some concerns on Wall Street about persistently high inflation crimping consumer spending and about the possibility that the economy could slip into a recession.

HIGHER PRICES:Get ready to spend more at the grocery store. Food prices expected to soar, USDA predicts.

BARGAIN SHOPPING:Celebrate Memorial Day 2022 with these TV deals from Samsung, LG and TCL

“The retail sales report really gave a boost of confidence to investors that consumers are doing well,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “As long as consumers stay strong the chance of us going into a recession in 2022 are very low.”

A person working on a laptop with the Wall Street sign and New York Stock Exchange in the background.

Inflation hits Walmart

Inflation is at a four-decade high, driven by demand for goods outpacing supplies in the aftermath of the pandemic. Supply chain problems have prompted businesses to raise prices on everything from food to clothing. Rising energy prices following Russia's invasion of Ukraine worsened pressure from inflation, as did China's strict lockdown measures over the last month as it faces a resurgence of COVID-19 cases in major cities.

Walmart, the nation's largest retailer, fell 11.5% for the biggest decline among S&P 500 stocks after reporting disappointing earnings and trimming its profit forecast for the year, partly because of inflation pressures.

SALARIES RISE:New Walmart truck drivers can now earn $110K to start

COUNTERING INFLATION:Biden says making more goods in the US, like cars and chips, will lower inflation. Can his plan work?

Several other retailers also lost ground. Target fell 2.5% and Bath & Body Works slid 3.1%. Supermarket operator Kroger fell 4.3%.

Central banks have been shifting policies to help fight inflation. The Federal Reserve is gradually pushing its benchmark short-term interest rate off its record low near zero, where it spent most of the pandemic. Investors are concerned that the central bank could cause a recession if it raises rates too high or too quickly and are watching for comments by Fed officials that might provide insight into the U.S. economic outlook and future policy moves.