Index ETFs Close Higher on Upbeat Retail Report

Major U.S. indexes closed up on Thursday after a surprisingly robust retail sales report allayed fears that the U.S. economy was headed for a steep pullback. 

The S&P 500 and tech-heavy Nasdaq rose 1.6% and 2.3%, respectively. The Dow Jones Industrial Average climbed more than 2.3%. ETFs tracking the S&P, the Vanguard S&P 500 ETF (VOO) and the SPDR S&P 500 ETF Trust (SPY) both jumped 1.7%. The tech-focused Invesco QQQ Trust (QQQ) spiked 2.5%. 

Recession concerns have been bedeviling markets for much of the past two weeks following weak jobs data and other signs of softening that shifted investors focus away from inflation. But the U.S. Commerce Department's report that retail sales had risen 1% in July coupled with strong second quarter earnings by retail giant Walmart indicated that growth was continuing. Walmart CEO Doug McMillon said consumer demand remained strong. 

"We aren't experiencing a weaker consumer overall," McMillon said. 

Other assets were mixed with Brent crude oil, a measure of energy markets, and gold rising 0.57% and 1.4%, but bitcoin spending trading hours mostly in negative territory. The largest cryptocurrency by market value was recently down 3.4% over the past 24 hours. 

Consumer-focused ETFs rallied Thursday following better-than-expected July retail sales data and strong earnings reports. The Commerce Department reported a 1% increase in advance retail sales, surpassing economists’ forecasts of 0.3% growth. 

The Consumer Staples Select Sector SPDR Fund (XLP) and Vanguard Consumer Staples ETF (VDC) both gained about 1% after Walmart shares jumped 7% on robust quarterly results. The retail giant exceeded Wall Street’s estimates and raised its full-year outlook, citing resilient consumer spending. 

The VanEck Social Sentiment ETF (BUZZ) climbed 3.7% as Nike shares rose over 4% following news of Bill Ackman’s Pershing Square Capital Management taking a new stake in the company. Regulatory filings revealed the firm held over 3 million Nike Shares at the end of June, worth about $229 million. 

The Trenchless Fund ETF (RVER) surged 3.6% after Ulta Beauty shares spiked more than 11%. This increase came after a regulatory filing disclosed Warren Buffett’s Berkshire Hathaway had acquired a $266 million stake in the beauty retailer during the second quarter.

Initial jobless claims for the week ended Aug. 10 declined by 7K to 227K, trailing the 236K consensus and 234K in the previous week.

Fixed income investors were rattled by the hotter-than-expected jobs number as bond market proxy iShares 20+ Year Treasury Bond ETF (TLT) fell 1.5%.

The four-week moving average was 236,500, a decrease of 4,500 from the prior week's average of 241,000 (revised from 240,750), the Department of Labor said Thursday.

TLT's price rose 2.5% over the previous week, as fixed income investors seeking price appreciation on falling interest rates bought shares of the Treasury ETF, as well as other bond funds.

The market may continue with bond price and yield fluctuation, as fixed income investors shift expectations of a Fed rate cut in September.