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Stronger retail sales and sentiment boost stocks
Source: Agencies |
December 12, 2009, Saturday
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STOCKS mostly rose yesterday on signs that consumers and businesses are feeling more confident about the US economy.
The Commerce Department said retail sales rose 1.3 percent in November, more than double the increase analysts had expected and better than the 1.1 percent rise in October.
The report boosted hopes that consumers are starting to feel more comfortable opening their wallets after months of building up their savings. A recovery in consumer spending, a major component of US economic activity, is seen as one of the key elements to sustained growth.
A separate report showing an increase in consumer confidence signaled that spending could continue to rise. The preliminary Reuters/University of Michigan consumer sentiment index increased more than expected in December.
In another welcome sign, the Commerce Department reported a 0.2 percent gain in business inventories in October, breaking a 13-month streak of declines. That's a signal that businesses expect consumers to step up their purchases.
Stephen Wood, chief market strategist at Russell Investments, said the day's reports help confirm that the economy is on the right track.
"We're going from the first global recession in 70 years to a tepid, but very real global growth story," he said.
The Dow Jones industrial average rose 65.67, or 0.6 percent, to 10,471.50. The Standard & Poor's 500 index gained 4.06, or 0.4 percent, to 1,106.41, while the Nasdaq composite index slipped 0.55, or less than 0.1 percent, to 2,190.31.
Stocks and the dollar oscillated during the week as investors tried to determine where the economy, and subsequently interest rates, are headed. After a stronger dollar sent the Dow down 104 points on Tuesday, stocks rebounded in the final three days of the week.
The Dow rose 0.8 percent for the week, its second straight weekly gain. The S&P 500 index rose for a third straight week, edging up less than 0.1 percent. The Nasdaq slipped 0.2 percent for the week.
Yesterday's gains in stocks came even as the dollar rose.
The ICE Futures US dollar index, which measures the dollar against other currencies, rose 0.7 percent.
For months, stocks and commodities have moved in the opposite direction of the dollar. The dollar has been falling for much of this year as low interest rates make other assets like stocks and commodities more attractive. A weaker dollar makes commodities cheaper for foreign buyers and helps boost the profits at companies that do business overseas.
Gold fell US$6.30 to US$1,119.80 an ounce. Oil slumped for an eighth day, sliding 67 cents to US$69.87 a barrel on the New York Mercantile Exchange.
Treasury prices mostly fell yesterday after the encouraging economic reports weakened demand for safe-haven investments. That pushed yields higher. The yield on the benchmark 10-year Treasury note rose to 3.55 percent from 3.50 percent late Thursday.
A steep drop in the number of employers who cut jobs last month and other signs of improvement in the economy have brought expectations that the Federal Reserve will raise interest rates sooner than later. That would boost the dollar and potentially hurt stocks as investors look for better returns elsewhere.
Next week, investors will be looking to the policy statement that follows a two-day meeting of the Fed's interest rate committee for clues on the direction of interest rates. Reports are also due on housing and industrial production, and companies including Best Buy Co. and FedEx Corp. are scheduled to post quarterly earnings.
Two stocks rose for every one that fell on the New York Stock Exchange, where volume totaled 1 billion shares versus 1.1 billion Thursday.
The Russell 2000 index of smaller companies rose 4.99, or 0.8 percent, to 600.37.
The Commerce Department said retail sales rose 1.3 percent in November, more than double the increase analysts had expected and better than the 1.1 percent rise in October.
The report boosted hopes that consumers are starting to feel more comfortable opening their wallets after months of building up their savings. A recovery in consumer spending, a major component of US economic activity, is seen as one of the key elements to sustained growth.
A separate report showing an increase in consumer confidence signaled that spending could continue to rise. The preliminary Reuters/University of Michigan consumer sentiment index increased more than expected in December.
In another welcome sign, the Commerce Department reported a 0.2 percent gain in business inventories in October, breaking a 13-month streak of declines. That's a signal that businesses expect consumers to step up their purchases.
Stephen Wood, chief market strategist at Russell Investments, said the day's reports help confirm that the economy is on the right track.
"We're going from the first global recession in 70 years to a tepid, but very real global growth story," he said.
The Dow Jones industrial average rose 65.67, or 0.6 percent, to 10,471.50. The Standard & Poor's 500 index gained 4.06, or 0.4 percent, to 1,106.41, while the Nasdaq composite index slipped 0.55, or less than 0.1 percent, to 2,190.31.
Stocks and the dollar oscillated during the week as investors tried to determine where the economy, and subsequently interest rates, are headed. After a stronger dollar sent the Dow down 104 points on Tuesday, stocks rebounded in the final three days of the week.
The Dow rose 0.8 percent for the week, its second straight weekly gain. The S&P 500 index rose for a third straight week, edging up less than 0.1 percent. The Nasdaq slipped 0.2 percent for the week.
Yesterday's gains in stocks came even as the dollar rose.
The ICE Futures US dollar index, which measures the dollar against other currencies, rose 0.7 percent.
For months, stocks and commodities have moved in the opposite direction of the dollar. The dollar has been falling for much of this year as low interest rates make other assets like stocks and commodities more attractive. A weaker dollar makes commodities cheaper for foreign buyers and helps boost the profits at companies that do business overseas.
Gold fell US$6.30 to US$1,119.80 an ounce. Oil slumped for an eighth day, sliding 67 cents to US$69.87 a barrel on the New York Mercantile Exchange.
Treasury prices mostly fell yesterday after the encouraging economic reports weakened demand for safe-haven investments. That pushed yields higher. The yield on the benchmark 10-year Treasury note rose to 3.55 percent from 3.50 percent late Thursday.
A steep drop in the number of employers who cut jobs last month and other signs of improvement in the economy have brought expectations that the Federal Reserve will raise interest rates sooner than later. That would boost the dollar and potentially hurt stocks as investors look for better returns elsewhere.
Next week, investors will be looking to the policy statement that follows a two-day meeting of the Fed's interest rate committee for clues on the direction of interest rates. Reports are also due on housing and industrial production, and companies including Best Buy Co. and FedEx Corp. are scheduled to post quarterly earnings.
Two stocks rose for every one that fell on the New York Stock Exchange, where volume totaled 1 billion shares versus 1.1 billion Thursday.
The Russell 2000 index of smaller companies rose 4.99, or 0.8 percent, to 600.37.
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