* Walmart hikes FY guidance, but Q3 margins hurt
* Home Depot hits record high on strong Q3
* October retail sales rise more than expected
* Dow up 0.36%, S&P 500 up 0.56%, Nasdaq up 0.76%
NEW YORK, Nov 16 (Reuters) - U.S. stocks climbed on Tuesday, as earnings from Home Depot and stronger than expected retail sales data signaled solid consumer health and eased concerns about a Federal Reserve that may need to become more aggressive to combat rising inflation.
Data showed retail sales jumped 1.7% in October, the largest gain since March and above the 1.4% estimate, indicating Americans have begun holiday shopping early in an effort to avoid a shortage of goods amid stretched supply chains.
Retailer Home Depot Inc jumped 5.91% to a record intraday high and was on pace for its biggest one-day percentage gain since April 2020 after beating quarterly sales estimates by nearly $2 billion and handily topping the earnings per share view.
“This does give people a sigh of relief that the retail outlook is still pretty rosy,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.
“The outlook is one where prices are rising but consumer spending is still strong and it looks like the supply chains are stressed but still we’re able to get goods on the shelves.”
The Dow Jones Industrial Average rose 130.41 points, or 0.36%, to 36,217.86, the S&P 500 gained 26.1 points, or 0.56%, to 4,708.9 and the Nasdaq Composite added 119.85 points, or 0.76%, to 15,973.70.
The S&P consumer discretionary subindex jumped 1.26% and was the best-performing S&P sector while the S&P 500 retailing index rose 1.30% to hit a record high for a second straight session.
Walmart Inc, the country’s largest brick-and-mortar retailer, raised its annual sales and profit forecasts. Its shares gave up early gains, however, and fell 2.57% as supply-chain woes dented margins and weighed on the consumer staples sector.
Retailers Target Corp, Macy’s Inc and Kohl’s Corp are set to report earnings this week.
Industrial stocks also gained after data showed U.S. manufacturing output surged to a two-and-a-half-year high in October.
The positive data helped investors look past comments from St. Louis Federal Reserve President James Bullard, who called for a more hawkish stance by the central bank in response to rising inflation.
Investors have also been eyeing the possibility that President Joe Biden may pick a new head of the Federal Reserve as Chair Jerome Powell’s term is set to end in February 2022.
Technology shares also moved higher, lifted in part by a 6.36% gain in chipmaker Qualcomm Inc, which rose after it said German automaker BMW will use its chips in its next generation of driver-assistance and self-driving systems.
Electric-car maker Tesla Inc rose 3.05%, its first advance in four sessions, even as CEO Elon Musk sold $930 million in shares. The stock had tumbled more than 15% last week after Musk began selling shares.
JPMorgan Chase & Co also sued Tesla for $162.2 million over a breach of contract related to stock warrants.
Declining issues outnumbered advancing ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored decliners.
The S&P 500 posted 79 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 138 new highs and 179 new lows.
Reporting by Chuck Mikolajczak in New York Editing by Matthew Lewis