The Dow Jones industrial average was up 444 points at its peak before closing at 25,558.73, up 396.32 points on the day, or 1.6 percent. Thursday’s gain was the best for the Dow since April 10. The Dow is up 3.4 percent on the year.
Howard Silverblatt, senior index analyst with S&P Dow Jones, said Thursday’s market surge put the Standard & Poor’s 500-stock index within less than 1 percent of its all-time high on Jan. 26, 2018, when it reached 2,872.87. Tech stocks lagged behind, with the Nasdaq closing up slightly at 7,806.52.
As of Thursday’s close, the S&P was at 2,840.69, within 1.1 percent of its high.
“We are up 4.5 percent already for the quarter,” Silverblatt said. “We are up 6.25 percent for the year. The bottom line is that it may be the doldrums of summer, but we are having a great quarter.”
Walmart topped the Dow 30 with a whopping 9.43 percent increase in its stock price, closing at more than $98 a share. The world’s biggest retailer reported the best sales in 10 years, largely on the back of its grocery business. Its full-year forecast was also strong, with the expectation of solid profits and more sales in 2019.
“Walmart tells us everything is very solid in the economy from the bottom up,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “People who shop at Walmart are generally very price-sensitive and frugal. For Walmart’s results to grow that much means those people have money to spend and are confident enough to go out and spend it.”
Walmart’s results follow that of Home Depot, the home improvement retail giant that reported second-quarter earnings and sales that week that blew by estimates.
Atlanta-based Home Depot said customers were spending more and shopping more often. The company said it expected sales to increase over the rest of 2018.
“We have Home Depot and Walmart to show how much consumers are spending. We have news of China talks,” Silverblatt said. “The fundamentals are there. We have much higher corporate earnings, cash flow is good, housing starts are still going up and it’s harder to get better than this level of unemployment.”
Ed Yardeni, president of Yardeni Research, said Thursday’s performance is a sign that investors are betting the current bull market still has legs.
“The market is heralding the potential for this expansion to continue through July of next year, at which point it will be the longest expansion ever,” Yardeni said. “There is nothing I can point to today that shows it can’t go beyond that. I’ve been very bullish on earnings, but not bullish enough.”
Dow component Boeing closed up 4.22 percent on a UBS analyst’s upgrade to “buy.” Boeing has been one of the best-performing Dow companies over the past year. Cisco finished up 2.9 percent following its quarterly earnings released Thursday morning. Caterpillar closed up 3.12 percent.
Much of Thursday’s gains came as markets recouped losses over worries that Turkey’s financial crisis and loss in value of its currency, the lira, would spread into a financial contagion.
“Wednesday was a big risk-off day with the fears of contagion,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. “If anything, the sell-off Wednesday was overdone. Thursday is putting you back to where you were two days ago.”
Markets have been bumping around for several weeks, swaying with news on trade and, more recently, on Turkey. But the fundamentals of the U.S. economy have kept markets mostly steady.
Despite Thursday’s strong earnings reports, investors should be on guard, according to Wayne Wicker, chief investment officer at ICMA Retirement Corp.
“As we overlay concerns regarding trade negotiations, investors should be prepared for some volatility over the coming months,” Wicker said.
“Today’s market action, given the prospects of renewed discussions with China, is a great example of this short-term volatility,” he added. “However, investors focused on the long term should try to focus on the strong underlying fundamentals that many companies are currently exhibiting.”