Stocks rise, boosted by retailer results

US stocks rose on Thursday, putting the Dow Jones Industrial Average on track for the fifth consecutive day, after strong results from retail traders lifted sentiment across the market.

Leading stocks added 1.8%, or about 580 points, while the S&P 500 gained 2.2%. The heavy Nasdaq Composite is up 3%, boosted by gains in Apple sharesAnd

MicrosoftAnd

Amazon.com and Tesla.

The outlook for stocks became more cheerful Thursday when several retail traders provided solid results. Macy’s reported strong sales growth and raised its earnings guidance, while discount chains Dollar General DG 13.92%

and Dollar Tree DLTR 20.89%

Exceeding Wall Street Profit Expectations.

Last week, results for retailers including Walmart, Target and Kohl’s raised concerns that rising costs are eroding profits while inflation is causing some consumers to rethink their budgets.

“After having a challenging time with retail last week, I’m starting to see some other signs that not everyone is doing bad,” said Wayne Wicker, chief investment officer at MissionSquare Retirement. “Maybe it provides more confidence that the consumer is still reasonably robust.”

The Consumer Appreciation sector rose 5.4%, making it the best performer among the 11 sectors of the S&P 500 Index.

Equity investors have had a particularly volatile period lately. Last weekend, the S&P 500 fell enough that it was on track to close at least 20% below its January peak. Then the index reversed course to avoid closing in a bear market area.

Despite the advances in the major indexes this week, many investors expect the markets to remain unstable for some time to come.

“I think we’ll continue to have more volatility going forward,” said Leslie Thompson, chief investment officer at Spectrum Wealth Management.

Investors have been studying how the Federal Reserve’s plans to tighten monetary policy to combat inflation could affect economic growth and the performance of financial markets.

The minutes of the Federal Reserve’s meeting released on Wednesday showed that policy makers were in agreement on a half percentage point increase in June and July, in line with previous communication. Major stock indices closed higher after the release.

“To some extent, markets have been reassured that the Fed will not tighten more aggressively than expected,” said Luc Filip, head of investments at SYZ Private Banking.

Traders worked on the floor of the New York Stock Exchange on Tuesday.


Pictures:

Justin Lin/Shutterstock

Money managers are closely watching the new data as they gauge the health of the economy. On Thursday, the second reading of US GDP for the first quarter was worse than the first with a contraction at an annual rate of 1.5%.

Economic data has been weaker than expected lately. We see this tightening in the economy. “How severe the slowdown in growth is what the markets are thinking right now,” said Chanel Ramjee, multi-asset fund manager at Pictet Asset Management.

Initial jobless claims fell last week and hovered near historic lows, indicating a mixed economic picture.

Earnings reports continued to drive moves in individual stocks. Analysts were scrutinizing the results for indications that inflation was beginning to weigh on earnings.

“We focus on profits and profitability. A lot of stable companies report lower guidance,” Ramji said. “Even the tech sector is not immune to margin pressure, especially from input costs such as wages.”

Nvidia shares rose 6% after the chip maker posted record revenue, even though its sales forecast for the current quarter fell short of Wall Street estimates.

Williams-Sonoma shares jumped 13% after the retailer posted earnings that beat analysts’ expectations. Macy’s shares are up 19% after raising full-year earnings guidance.

Dollar Tree shares are up 20% and Dollar General shares are up 15% after discount retail chains reported higher-than-expected earnings.

Shares in VMware VMW 3.25%

It added 3.8% after Broadcom confirmed it would acquire the cloud computing company for $61 billion in cash and stock. Broadcom shares rose 3.9 percent.

In the bond market, the yield on the 10-year US Treasury rose to 2.761% from 2.746% on Wednesday. Yields rise as bond prices fall.

Brent crude, the global benchmark, rose 3 percent to trade at $117.50 a barrel.

Offshore, the Stoxx Europe 600 continental index was up 0.8%. In Asia, the main criteria were mixed. The Shanghai Composite added 0.5% while Hong Kong’s Hang Seng fell 0.3%. Japan’s Nikkei 225 was also down 0.3%.

South Korea’s central bank raised its key interest rate to 1.75% on Thursday and indicated it would tighten policy further to continue combating high inflation.

Write to Karen Langley at karen.langley@wsj.com and Anna Hertenstein at anna.hirtenstein@wsj.com

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