Stocks rallied on Thursday as investors regained confidence in the economy following encouraging consumer and labor data that helped ease recession worries.

The Dow Jones Industrial Average leaped 554 points, or 1.39%, to end the day at 40,563.06. The S&P 500 closed up 1.61% at 5,543.22, for its sixth straight gain. The broad market index has advanced roughly 8% from its intraday bottom on Aug. 5. The Nasdaq Composite jumped 2.34% to 17,594.50.

Retail sales increased 1% in July, far surpassing an estimate from Dow Jones that forecast a 0.3% uptick. Also separately, weekly jobless claims fell for the week. The data served as a boon to investors and a broader market trying to mount a comeback from an August rout tied to concerns about a slowing economy that arose following July's disappointing jobs report on Aug. 2.

After a more than 3% gain this week, the S&P 500 is now roughly 2% below its record. The three major U.S. indexes are now trading above their Aug. 2 closing level, which was the session before the global stock market rout on Aug. 5 that was largely driven by investors' concerns about an economic slowdown and an unwinding of a popular hedge fund currency trade.

"Today's solid retail sales and claims data is a reminder that the sky is not falling on the U.S. economy," Wolfe Research chief economist Stephanie Roth wrote on Thursday. "Yes, economic momentum has cooled, but we don't appear to be headed for recession imminently."

Encouraging inflation data this week had largely swept away investors' recessionary fears prior to Thursday's swath of economic data, and led to a rebound in equities following last week's sharp global sell-off.

Dow component Walmart added to the momentum, with a raised outlook and an earnings report that topped analyst estimates, sending shares up 7%. Elsewhere, Cisco Systems jumped 7% after announcing a fiscal fourth-quarter earnings and revenue beat and cuts to its global workforce.

Stocks climbed on Wednesday after the consumer price index reflected a slowing annual inflation rate of 2.9%, the lowest since 2021. That data — coupled with a key measure of wholesale inflation released Tuesday that rose less than expected — has reassured investors that an economic soft landing is back on the table and that the Federal Reserve will likely lower interest rates at the central bank's September meeting.

Stocks close higher

Stocks closed higher on Thursday after better-than-expected retail sales data helped extended Wall Street's recent rally.

The S&P 500 added 1.61% to close at 5,543.22, while the Nasdaq Composite gained 2.34% to 17,594.50. The Dow Jones Industrial Average advanced 554 points, to 1.39%, to finish the session at 40,563.06.

— Brian Evans

S&P 500 slides can make for buying opportunities, market strategist says

After recent choppiness in the market, any future slides in the S&P 500 can create good places to buy in, according to Scott Wren, senior global market strategist at the Wells Fargo Investment Institute.

"Our analysis suggested investors were too optimistic as the SPX was notching new record highs," he wrote to clients on Wednesday. "However, we have been of the opinion that, based on our economic outlook through year-end 2025, downdrafts in the SPX may represent buying opportunities."

While he doesn't foresee emergency rate cuts from the Federal Reserve, the strategist said cuts expected in the near future should allow for better economic performance. Wren said he continued to favor large cap and domestic equities.

— Alex Harring

S&P 500 could drop toward 5,000 in the coming weeks, says Piper Sandler

The S&P 500 could soon move closer to the 5,000 level, according to Piper Sandler.

"More evidence is needed to determine if this is more than a relief rally for stocks," the investment bank said in a Thursday note. "While the major indices have rebounded from their early August corrections, they now confront significant resistance with a deterioration in market breadth."

Piper suspects that until shown otherwise, stocks "will likely back and fill around their 50-/200-day MAs" in the weeks ahead – or until they undergo a "decisive reversal of their downtrends from the July highs."

The firm notes that the S&P 500's 50-day MA is at 5,455, while its 200-day MA is at 5,037.

— Sean Conlon

Chip stocks outperform on Thursday

Semiconductor stocks were running well ahead of the broader market on Thursday.

The iShares Semiconductor ETF (SOXX) rose 5%, while SPDR's S&P Semiconductors Fund (XSD) jumped 5.4%.

Industry leader Nvidia rose 4%, outperforming the broader market, while Broadcom climbed more than 5%. Monolithic Power Systems rose 6.7% and hit a new 52-week high.

— Jesse Pound

'Bulls on parade,' but exercise caution, says BTIG

The S&P 500 is on pace for its sixth straight day of gains Thursday, moving away from the sharp sell-off lat week. The broad market index's next resistance level is at 5,566, or last week's high, followed by the all-time high of 5,670.

The "bulls [are] on parade," said chief market technician Jonathan Krinsky. "Despite the fact that we never got a breadth washout at the lows last week, it's hard to dismiss the strength and we have to respect the price action, as well as this morning's strong economic data."

Although BTIG doesn't expect the market to re-test last week's lows, it noted that some consolidation is ahead before the S&P 500 can test back to the highs again.

"We never want to flip 180 degrees at one point in time," Krinsky added. "Clearly the market is stronger than we thought, so we will respect that for now, but many names are not at timely buy points right now. Should we get consolidation over coming days, there will likely be plenty of time to re-engage on the long side."

— Hakyung Kim

S&P 500 rises into green territory for August, heads for best week of 2024

Thursday's rally pulled the S&P 500 into positive territory for August and added to sharp weekly gains.

The broad index jumped more than 1% in midday trading, placing it on track for its sixth straight winning day. With that gain, the S&P 500 is now up about 0.2% compared with where it started the trading month.

Those advances have led to a 3.5% week-to-date climb. If that holds through session close, it would mark the S&P 500's best weekly performance since November 2023.

— Alex Harring

S&P 500 health care sector — and health care ETFs — climb to all-time highs

The S&P 500 health care sector climbed as much as 0.66% intraday Thursday, rising to an all-time high and extending its lead over the large cap S&P 500 so far in the third quarter.

Since the end of June, health care stocks have jumped 4.3% versus just 1.3% for the S&P 500. (Because of the first half, however, the S&P 500 still tops health care year to date, 16% to 11.5%).

Also setting all-time highs on Thursday were the two largest health care exchange-traded funds, the $41 billion Health Care Select Sector SPDR Fund (up 4.1% in the quarter and 12.1% year to date) and the $18 billion Vanguard Health Care Index Fund ETF (4.3% and 11.4%).

One area of health care that continues to lag, however, is biotech. The iShares Biotechnology ETF reached a 52-week high in July, but last traded at an all-time high in Sept. 2021, while the SPDR S&P Biotech ETF last traded at a 52-week high in February 2024, but hasn't seen a record close since Feb. 2021.

— Scott Schnipper

Nelson Peltz adds stake in U-Haul

Trian Fund Management added a nearly $80 million position in U-Haul Holding during the second quarter, according to a securities filing released Wednesday.

Trian is run by activist investor Nelson Peltz, though it is not clear if he is trying to influence company management at U-Haul.

Shares of U-Haul were up more than 2% in midday trading.

Read more about Trian and other hedge fund moves on CNBC Pro.

— Jesse Pound

Small cap stocks outperform large and mid-cap stock indexes Thursday

With investors reassured by stronger-than-expected July retail sales about the state of the U.S. economy, small cap stocks are outperforming mid- and large cap stocks at midday Thursday.

The Russell 2000 small cap index was recently ahead almost 2.8% against gains of about 2.1% in the S&P Midcap 400 index and 1.4% in the large cap S&P 500.

For the week, smallcaps are higher by 2.9% against 3.5% for large caps and 2.6% for midcaps.

Inside the smallcap universe, growth stocks are outperforming value stocks, with the Vanguard Small-Cap Growth Index Fund ETF rising 2.5% against 2.1% for the Vanguard Small-Cap Value Index Fund ETF.

— Scott Schnipper

There was a positive news 'hat trick' on Thursday, according to economist Ed Hyman

Evercore ISI economist Ed Hyman told clients in a note that the three big pieces of news Thursday amounted to a "positive growth hat trick."

Hyman referred to the stronger-than-expected retail sales, a tick down in jobless claims and strengthening Walmart sales in the note.

"The S&P is responding positively to this package of stronger data," wrote the economist, who is among the most followed on Wall Street. "So today, good news is good news."

—John Melloy

Morgan Stanley isn't ready to upgrade Boeing, but says there's a tactically bullish set-up

Morgan Stanley isn't ready to upgrade Boeing after its troubles this year, but expects there's a tactically bullish set-up for the stock in the fourth quarter.

Analyst Kristine Liwag maintained an equal-weight rating on the aircraft manufacturer following the firm's Boeing Bull vs. Bear Lunch, in which investor attendees debated the outlook for the beleaguered stock that's down more than 30% this year.

During the lunch, some bears eventually moved over to the bulls' point of view, while bulls stuck to their own side, the analyst noted. Regardless, the analyst came to the conclusion there is too much uncertainty remaining in the stock to give it an upgrade, though there could be some near-term moves to the upside.

"Our takeaway is that we've seen significant volatility in Boeing's stock and the pull of the rotation for an underperforming stock is strong. The seasonal trading pattern for Boeing's stock in the past two years could be applicable for this year, providing a tactically bullish set-up into 4Q24," analyst Kristine Liwag wrote on Thursday.

"However, in the long-term, we still see balanced risk reward as there continues to be significant uncertainties regarding Boeing's long-term earnings power," Liwag added.

The analyst's $195 price target implies 15% upside from Wednesday's close. The stock is up 2.4% in midday trading.

— Sarah Min

An auto sales recovery driven by incentives boosted the retail sales data, economist says

An auto sales recovery driven by incentives was behind the surprisingly strong retail sales report for July, according to LPL Financial.

Jeffrey Roach, chief economist at the firm, said a jump in motor vehicles and vehicle parts sales bolstered the latest retail sales report, which showed a 1% jump in July compared to the anticipated 0.3% increase, according to a Dow Jones estimate.

That's because new car sales incentives were the highest they've been in more than three years, up to 7% of the average transaction price in July, from 6.4% on average in June, the economist noted.

However, investors should not expect the data to change what the Federal Reserve will do in September, especially with Atlanta Fed President Bostic saying the central bank cannot afford to be behind the curve amid signs of weakening in the labor market.

"Investors should expect more volatility in the near term as the economic data likely give conflicting signals," Roach added.

— Sarah Min

Walmart raises guidance, but there's a big caveat

Walmart shares jumping after modest second quarter EPS and revenue beats along with a solid same-store sales beat at its Walmart U.S. stores (up 4.2% vs. Wall Street expectations of up 3.4%).

The country's biggest retailer also said it's raising full year guidance. While that sounds good on paper, the raise was directly due to better-than-expected results in both the first and second quarters. Walmart hadn't officially changed its guidance since first issuing its forecast in its fourth quarter report back in February. Today's increased outlook now takes into account not just the modest 2-cent earnings beat from this morning, but also the far larger 8 cent EPS beat from the first quarter and the $2 billion beat on revenues three months ago.

Take those strong first half results out, and the new full year forecast actually indicates a fairly dour second half. The retailer's implied second half EPS forecast appears to be $1.08-$1.16, well below the consensus estimate of $1.19. Walmart also gave third quarter earnings guidance that was below Wall Street expectations. CFO John David Rainey told CNBC's Melissa Repko, "In this environment, it's responsible or prudent to be a little bit guarded with the outlook, but we're not projecting a recession."

But investors seem to be ignoring tepid retail guidance this week. Shares of both Walmart and Coach parent Tapestry are getting a nice boost this morning despite disappointing forecasts. Both of those come after Home Depot shares rose despite giving a poor outlook on Tuesday.

- Robert Hum

Stocks making the biggest moves midday

Check out the companies making headlines in midday trading.

Walmart — Shares of the discount retailer jumped 7% on strong earnings. Walmart topped Wall Street's quarterly estimates and lifted its full-year outlook as consumers show ongoing resilience. For the year, the company expects sales to rise between 3.75% and 4.75%, and adjusted earnings to come in between $2.35 and $2.43 per share.

Nike — The athletic apparel and sneaker retailer saw its shares climb about 4% after Bill Ackman's Pershing Square Capital Management revealed a new stake in the company through its latest 13F regulatory filing. The firm owned more than 3 million shares of Nike at the end of June, a stake worth roughly $229 million, the filing disclosed.

Ulta Beauty — The beauty retailer saw shares pop more than 11% after a regulatory filing revealed that Warren Buffett's Berkshire Hathaway took a stake worth $266 million in the second quarter. The bet is relatively minor for Berkshire, whose equity portfolio is worth more than $300 billion, so it could have been bought by one of Buffett's lieutenants Ted Weschler and Todd Combs.

The full list can be found here.

— Hakyung Kim

Yen continues weakening against the dollar

The Japanese yen weakened 1.1% against the U.S. dollar on Thursday and was last at 148.97 against the greenback.

Week to date, the yen has depreciated 1.6% versus the dollar, paring back much of its climb earlier in August. For the month, the yen has now strengthened just 0.7% against the dollar.

The benchmark Nikkei 225 index has advanced nearly 5% over the week on better-than-expected second-quarter GDP data.

— Hakyung Kim

Cisco Systems heads for best session since March 2020

Shares of Cisco Systems popped more than 7% and headed for their best day since March 2020 after the networking equipment maker topped fiscal fourth-quarter estimates and said its eliminating 7% of its workforce.

The company posted adjusted earnings of 87 cents per share on $13.64 billion in revenue. Cisco also reported its third consecutive drop in quarterly revenue.

Shares have slumped about 3% this year.

— Samantha Subin

Retail ETF on pace for best day since July

Shares of the SPDR S&P Retail ETF (XRT) rose 3.3% in morning trading, putting it on pace for its best day in about a month. If that holds through market close, it'll mark the fund's best day since July 16, when shares gained around 3.6%.

XRT's gains are spurred in part by Ulta Beauty, Ollie's Bargain Outlet, Five Below, Victoria's Secret and Walmart, which were all up more than 6% during the session.

Not only that, Ulta shares were up more than 10.5% Thursday, putting it on pace for its best day since Dec. 1, 2023, when the stock advanced around 10.8%.

— Sean Conlon, Gina Francolla

Dow notches sixth 400 point move this month

The blue-chip Dow Jones Industrial Average jumped 450 points, or 1.1%, on Thursday following better-than-expected weekly jobless claims and retail sales data. This market the sixth time the 30-stock average has moved more than 400 points in August.

Week to date, the Dow is up 2.4% and has managed to pare back much of its losses from broad sell-off in the previous trading week. The major average is now down 0.9% for the month.

The Dow began August in the red with declines of more than 400 points in the first three sessions. It fell as much at 1,034 points on August 5 before rallying 683 points on August 8.

 (Correction: Post incorrectly stated the number of times the Dow advanced this month.)

— Hakyung Kim

Stocks open higher

Stocks opened higher on Thursday, following better-than-expected retail sales and initial jobless claims data.

The S&P 500 ticked up 1%, while the Nasdaq Composite added 1.21%. The Dow Jones Industrial Average surged 400 points, or 1.23%.

— Brian Evans

Retail sales advanced 1% in July

Consumer spending increased more-than-expected in July, adding another layer of positive economic data to investors hoping to continue a recent market rally.

U.S. Retail sales increased 1% in July, surpassing an estimate from Dow Jones that forecast 0.3%. Excluding auto-related figures, sales ticked up 0.4%, which was also better than a 0.1% forecast.

— Brian Evans

Stocks making the biggest moves before the bell

These are the stocks making significant moves before the bell:

• Ulta Beauty — Shares of the beauty retailer popped a whopping 13% in premarket trading after a regulatory filing revealed that Warren Buffett's Berkshire Hathaway took a stake worth $266 million in the second quarter.
• Walmart — The stock surged 7% after the retailer surpassed Wall Street's top-and-bottom line expectations and lifted its full-year guidance, citing healthy consumers. The company posted adjusted earnings of 67 cents per share on $169.34 billion in revenue.
• Cisco Systems — Shares gained 6% after the networking company topped Wall Street's fiscal fourth-quarter estimates and announced plans to layoff 7% of its workforce. The company said it is undertaking a restructuring plan that will contribute to $1 billion in pretax charges to its financial results.

Read the full list of stocks here.

— Samantha Subin

Walmart shares jump on raised outlook, earnings beat

Walmart shares popped more than 5% in early trading after the big-box retailer and Dow component reported quarterly earnings that beat Wall Street forecasts.

The big-box retailer raised its full-year outlook and reported improving sales and traffic to its website. Walmart said it now expects sales to accelerate by 3.75% to 4.75% for the full year, with adjusted earnings seen between $2.35 and $2.43 per share.

—Jeff Cox

Cisco, Ulta among stocks making biggest moves after market close

Check out the companies making headlines in after-hours trading:

• Ulta Beauty — Shares popped about 12% after Warren Buffett's Berkshire Hathaway's 13F regulatory filing revealed the conglomerate took a new stake in the cosmetics company worth $266 million, a small position for Berkshire.
• Snowflake — The cloud company's shares slipped 1% after Berkshire Hathaway entirely dissolved its stake in Snowflake in the second quarter, according to its latest regulatory filing.
• Cisco Systems — The stock jumped 6% after the networking company reported an earnings and revenue beat for its fiscal fourth quarter, and also issued an optimistic forecast. Cisco posted adjusted earnings of 87 cents per share on revenue of $13.64 billion, while analysts polled by LSEG expected it to earn 85 cents per share on revenue of $13.54 billion. For the fiscal year, both revenue and earnings fell from the prior year, its first drop since 2020. Cisco also announced it will cut 7% of its global workforce.

For more, read here.

— Pia Singh

Stock futures open higher

Equity futures opened in the green when trading reopened at 6 p.m.

Futures tied to the Dow added 36 points, or about 0.1%. S&P 500 futures and Nasdaq 100 futures edged up 0.05% and 0.1%, respectively.

— Pia Singh