The retail sector enjoyed a broad stock rally Thursday, as blowout results from Walmart Inc., in the wake of upbeat economic data, helped negate the largest-ever plunge in J.C. Penney Co. Inc. (JCP) shares.
The SPDR S&P Retail exchange-traded fund (XRT) gained 0.3%, paring earlier gains of as much as 1.1%. The bounce follows a 2.7% decline on Wednesday, in which disappointing results from Macy's Inc. (M) prompted a pullback from Tuesday's record close.
Walmart's stock (WMT) soared 9.3% to close at a six-month high on volume of 42.6 million shares, to pace the retail ETF's gainers, after the discount retail giant reported fiscal second-quarter earnings, revenue and same-store sales that beat expectations, and raised its full-year outlook.
The price gain of $8.42 added about 57 points to the Dow Jones Industrial Average's price (.DJI), which ran up 396 points.
"Combine store bricks and digital clicks; it's working," wrote analyst Oliver Chen at Cowen in a note to clients, as he reiterated his outperform rating and $105 stock price target.
Walmart's fortunes were in stark contrast to J.C. Penney's hardships, as the department store chain's stock plummeted 27% to a record closing low, after the struggling retailer reported a wider-than-expected loss and slashed its outlook. That exceeded the previous biggest percentage selloff of 19.7% on May 16, 2012.
The stock was the most actively traded on the New York Stock Exchange, as volume of 83.8 million shares was nearly six-times the full-day average.
Among other more active retailer stocks, Macy's Inc.'s, which dragged the sector lower on Wednesday with its 16% tumble, bounced 1.9%.
Elsewhere, shares of Rite Aid Corp. (RAD) climbed 4.4%, Target Corp. (TGT) rose 1.7%, Kroger Co. (KR) advanced 1.6%, Walgreens Boots Alliance Inc. (WBA) added 1.3% and Amazon.com Inc. (AMZN) edged up 0.2%.
The resumed retail-sector rally comes on the heels of data showing retail sales increased 0.5% in July, well above expectations of 0.1% growth, amid strong showings by internet retailers, department store chains and clothing stores.
"Details of the report suggest broad-based gains across most product categories except a few pockets of softness," wrote Nomura's chief U.S. economist, Lewis Alexander, in an Instinet research note. "Overall, the report suggests continued momentum in personal spending in Q3 after a transitory slowdown in end-Q2."
Also helping bring back buyers was optimism over reports that China and the U.S. will resume trade talks, in an attempt to settle a trade spat that has led countries sides to impose tariffs on imports.