What happened

Visa (V -1.19%) was falling on Tuesday, down as much as 2.6% on the day. As of 3 p.m. ET it had bounced back a bit and was down 1.2%. The stock was trading at approximately $241 per share at 3 p.m. ET, up about 16.2% year to date.

The major markets were all up on Tuesday as the S&P 500 index was up 32 points, or 0.7%; the Dow Jones Industrial Average climbed 363 points, or 1.1%; and the Nasdaq Composite gained 126 points, or 0.9%, as of 3 p.m. ET.

So what

The primary catalyst for Visa, the world's largest payment processor, was the U.S. Commerce Department's retail sales report for June.

Retail sales were up slightly in June, according to the Commerce Department, with 0.2% growth. However, that was below the 0.5% expectation among economists. Spending at gas stations and at building material stores was down, but core retail sales, which excludes those two, as well as automobiles and food services, was up 0.6% in the month.

Online sales had their best month this year, up 1.9%, while furniture stores, up 1.4%, electronics/appliance stores, up 1.1%, and clothing retailers, up 0.6%, were among the best performers.

As Visa relies on consumer spending for revenue, the market reacted accordingly to the worse-than-expected report.

Now what

While retail sales did not quite meet expectations, there is nothing here to be too concerned about with Visa.

After more than a year of consistent interest rate hikes, consumer spending has been very resilient. And while the expectation is for the Federal Reserve to raise rates in July after pausing hikes in June, the rate tightening cycle should be ending soon as inflation dropped to 3% in June, closer to the Fed's target of 2%.

Visa remains a good buy right now, as it has been resilient through the market downturn and is trading at a reasonable valuation, given its earnings power, with a forward price-to-earnings (P/E) ratio of 24. 

Visa reports its fiscal third-quarter earnings next week on July 25 after market close, so tune in to that and the resulting coverage for additional insight.