Data and earnings ease recession fears

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Winning streak
Wall Street rallied as strong retail sales and labor data eased recession fears. The S&P 500 and Nasdaq Composite notched their sixth consecutive day of gains, rising 1.61% and 2.34% respectively, while the Dow Jones Industrial Average surged 554 points. All three indexes have recovered to their levels before the global stock market rout on Aug. 5. Meanwhile, the yield on the 10-year Treasury rose, while U.S. oil prices climbed 1.3% as recession fears eased.

Consumer health
Walmart’s shares rose 6.5% after the discounter boosted its annual sales and profit forecasts and second-quarter results beat Wall Street estimates. While traders have been on the lookout for signs of economic weakness, CFO John David Rainey told CNBC Walmart has not seen a shift in consumer behavior. “We see, among our members and customers, that they remain choiceful, discerning, value-seeking, focusing on things like essentials rather than discretionary items, but importantly, we don’t see any additional fraying of consumer health.”

Renewed confidence
United Airlines CEO Scott Kirby expressed renewed confidence in Boeing’s recovery after meeting with the plane maker’s new CEO. United, which has 484 unfilled Boeing orders, has expressed frustrations about the aircraft maker’s troubles, which have delayed deliveries. Kirby had lunch with Boeing’s new CEO Robert Ortberg earlier this week. In a LinkedIn post on Thursday, Kirby said he “came away with a renewed confidence that Boeing is on the right path and will recover faster than most expect.” Ortberg also met with American Airlines CEO Robert Isom earlier this week, according to a person familiar with the matter.

Streaming wars
As legacy media companies vie for both viewership and profitability in the streaming wars, CNBC’s Alex Sherman uncovers the inside story of what drove executives at Comcast‘s NBCUniversal to splash out $2.45 billion annually for 11 years to secure NBA games for its Peacock streaming service. But with competition from Netflix, Amazon Prime Video and Disney+, the question remains: Will this massive investment be enough to ensure Peacock’s long-term sustainability? Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.

Asia markets rise
Japanese stocks were set for their best week in four years as U.S. recessionary fears receded. Japan’s export-heavy Nikkei 225 and the broader Topix, rose 3.6% and 3%, respectively. Singapore’s Straits Times advanced 1% after non-oil domestic exports in July grew 15.7% year on year, massively beating expectations. South Korea’s Kospi was trading 2% higher as investors returned from a public holiday and Australia’s S&P/ASX 200 climbed 1.3%. Hong Kong’s Hang Seng index rose 1.8%, while mainland China’s CSI 300 was little changed.

[PRO] S&P 6,000
Despite recent market volatility, Morgan Stanley Investment Management’s Andrew Slimmon predicts the S&P 500 could get “closer to” 6,000 by year-end. Here are some of the stocks he recommends. 

Live long and prosper. Star Trek fans will instantly recognize the phrase. It also served as the inspiration for the ticker symbol, LLAP, of spacecraft manufacturer Terran Orbital, which, ironically, didn’t live long as a publicly traded company.

Lockheed Martin had to step in and rescue the floundering company in a $450 million deal. Terran Orbital was one of many space companies, including Astra Space and Virgin Galactic, that went public through SPAC or special purpose acquisition company deals. Once valued at billions of dollars, these companies have seen their valuations collapse. Astra, for instance, was valued at just $12 million when it was bought back by its co-founders.

At the time of Terran’s public debut, CEO Marc Bell told CNBC, “We look at a lot of these space SPACs that have gone out and a lot of them weren’t businesses that should have gone public. We, on the other hand, have real revenues, real pipeline, real backlog, real customers.”

But space is expensive. Richard Branson’s Virgin Galactic had to execute a 1-for-20 reverse stock split just to maintain its listing on the New York Stock Exchange. Meanwhile, Branson’s satellite venture, Virgin Orbit, has already gone bankrupt, and Virgin Galactic has halted space tourism as it focuses on redesigning a new reusable spacecraft.

Even legacy companies aren’t immune to challenges. In early June, Boeing successfully sent astronauts Butch Wilmore and Suni Williams into space, but the Starliner capsule’s thrusters failed during docking with the International Space Station. NASA has yet to decide whether to bring the capsule back with a crew or leave it uncrewed.

Back on Wall Street, there was a sense of relief as retail sales and Walmart’s earnings revealed that consumers were more resilient than previously thought. CNBC’s Bob Pisani explains why the “soft landing” hypothesis for the economy remains viable.

John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, expressed confidence in the market’s outlook, stating he’s “comfortable at this point with prospects for a soft landing, or perhaps at worst a slightly bumping landing if we get a tantrum if the Fed doesn’t give the market 50bps [basis points] in September and goes for 25 instead.”

Stoltzfus, who has a 5,900 target for the S&P 500, told CNBC, “Essentially, things are looking good. We got resilience related to the consumer, resilience related to earnings, if you look at S&P 500, five sectors [had] double-digit earnings growth, cyclicals still out performing defensives, and the beginning of the broadening of the market in some respects to the small and the mids [caps].”

— CNBC’s Michael Sheetz, Melissa Repko, Jeff Cox, Brian Evans, Pia Singh, Alex Sherman, Leslie Josephs, Spencer Kimball, Lim Hui Jie and Weizhen Tan contributed to this report.