Wall Street Rallies on Inflation Data, Walmart Soars After Earnings
4:29 pm Tuesday, November 15th, 2022
Following yesterday’s late afternoon sell-off, the market has traded today with an upside bias. Trading conditions have been a bit choppy, yet the indices have shown some fairly good resilience thus far to selling interest. The upside bias follows a pleasing earnings report from Walmart (WMT), and an October Producer Price Index (PPI), which came in cooler-than-expected and added fuel to the market’s notion that the Fed is likely to take a less aggressive rate-hike approach going forward.
The PPI report for October revealed some welcome disinflation at the producer level with total PPI up 8.0% yr/yr, versus 8.4% in September, and core PPI, which excludes food and energy, up 6.7% yr/yr, versus 7.1% in September.
Market participants are also responding to the following catalysts:
China reporting weaker-than-expected retail sales, industrial production, and fixed asset investment data for October, stirring hope that new stimulus will be enacted and that officials will find away to embrace a shift away from the economically-damaging zero-COVID policy.
The BofA Global Fund Manager Survey again showing an elevated cash position of 6.2% that is higher than what was seen during the global financial crisis and the 2020 pandemic panic, stirring contrarian buying interest.
Walmart (WMT) is up 7.5% after posting better-than-expected earnings results and announcing a $20 billion share repurchase authorization.
The 2-yr note yield is down four basis points to 4.37% and the 10-yr note yield is down five basis points to 3.82%.
Broad buying interest has all 11 S&P 500 sectors trading in positive territory with gains ranging from 0.1% (materials) to 2.5% (communication services). The S&P 500 has moved back above the 4,000 level, supported by leadership from its largest components.
The Vanguard Mega Cap Growth ETF (MGK), up 2.1%, embodies the latter point.
The communication services sector enjoys the top spot on the leaderboard thanks to a big gain in Paramount (PARA) after Berkshire Hathaway (Warren Buffett) disclosed an increased position in the company in its 13F filing. Alphabet (GOOG) and Netflix (NLFX) also help boost sector gains. The latter received a double-upgrade to Buy from Underperform at BofA Securities.
Semiconductors are another strong spot in the market. TSMC (TSM 81.63, +8.84, +12.2%) is a winning standout for the group after Berkshire Hathaway disclosed a new position of ~60.06 million shares in a 13F filing. The PHLX Semiconductor Index is up 4.0%.
