U.S. stocks moved higher Tuesday, while the dollar extended declines for a third consecutive session, as investors took solace from a rare bit of positive news from China's Covid crisis and braced for a key reading of U.S. retail sales prior to the start of trading.
Early gains were tempered, however, by weaker-than-expected first quarter earnings from Walmart (WMT), as well as a warning on the impact of surging inflation to the bottom line of the world's biggest retailer.
The dollar's three-day retreat, while modest, provided a spark of investor optimism following news that Shanghai had recorded its third consecutive day with no new Covid infections, an important benchmark that could trigger the easing of restrictions on business and travel in China's biggest city.
Regional stocks got a boost on the news, with the MSCI ex-Japan benchmark rising 2.36% on the session and helping Europe's Stoxx 600 to an early 1.5% gain in Frankfurt.
Growth concerns remain paramount in global markets, however, with surging inflation and aggressive central bank rate signaling raising the specter of stagflation -- or recession -- in major economies around the world.
A path around that, at least in the United States, could come from consumer spending, which makes today's April retail sales reading all the more influential for market direction.
April retail sales, in fact, rose 0.9% from the previous month to a collective $677.7 billion, the Commerce Department said, largely in line with the Street consensus forecast and the fourth consecutive monthly gain. The March total was revised firmly higher, to 1.4%, the Commerce Department report showed, from the original estimate of a 0.5% advance.
Stocks remain rate-sensitive for the moment, however, moving in tandem with moves in the Treasury bond market, where falling yields suggest deeper growth concerns and rising yields hint towards near-term economic optimism.
Benchmark 10-year Treasury note yields were last seen modestly higher on the session at 2.977% -- 5 basis points higher on the session -- following the retail sales data, while the U.S. dollar index -- a broad indicator of investor caution -- fell 0.7% against a basket of its global peers to trade at 103.476 in overnight dealing.
The CME Group's FedWatch tool, meanwhile, suggests at least at 21.1% chance of a 75 basis point rate hike in July, despite assurance from Federal Reserve Chairman Jerome Powell that such a move is not being "actively considered" by his colleagues on the Open Markets Committee.
Powell will also speak at the Wall Street Journal's 'Future of Everything' event at 2:00 pm Eastern time today.
On Wall Street, the Dow Jones Industrial Average was marked 160 points higher in late-morning trading while the S&P 500, which is down 15.9% for the year, gained 35 points. The tech-focused Nasdaq was up 110 points.
Walmart was the most active pre-market mover, falling 8.85% after it posted weaker-than-expected first quarter earnings, and cut its full-year profit forecast, as surging costs ate into the bottom line of the world's biggest retailer.
Home Depot (HD), however, rose 3% after it posted stronger-than-expected first quarter earnings and boosted its full-year profit guidance as the world's biggest home retailer recorded record sales amid the still-elevated domestic housing market.
JD.com JD surged 8.8% on better-than-expected first quarter earnings as active users neared 600 million amid a resurgence in online retail activity following Covid-triggered lockdowns in some of China biggest cities.
Twitter (TWTR) shares, meanwhile, extended their slide to an eighth consecutive session as Elon Musk said the social media group must prove that spam and bot accounts comprise only a small portion of its user base for his $44 billion takeover to proceed.
