Strong retail sales send stocks higher for third day
Wall Street registered gains for the third consecutive day Thursday, following European stocks higher after central banks in Europe took action to increase liquidity. Economic data, including retail sales, also showed a U.S. economy that is performing better than expected.
The Standard and Poor’s 500-stock index rose 20.94 points, or 1.83 percent, to 1,164.97, and has risen 5.9 percent since Monday.
On Friday, the Labor Department is scheduled to release its jobs report for September, one of the most highly anticipated indicators of the economy.
Weekly jobless claims rose 6,000, to 401,000, from a revised level of 395,000 last week, the Labor Department said Thursday. The four-week moving average was 414,000, which was 4,000 lower than the previous month and slightly better than analysts’ expectations.
President Barack Obama held a news conference Thursday to pressure Congress to pass his jobs legislation, and said he was comfortable with a proposal to place a surtax on income over $1 million to cover the bill’s $445 billion cost.
A report on retail sales for September showed the biggest increase in sales since May at stores open at least a year. The companies tracked by Thomson Reuters posted a 5.1 increase in sales, beating analysts’ estimates.
“Last week, when the market was in free fall, the idea was that a recession was inevitable. We’re clearly not out the woods yet, but I think it’s less likely,” said Byron Wien, vice chairman of Blackstone Advisory Partners.
The Dow Jones industrial average gained 183.38 points, or 1.68 percent, to 11,123.33. The Nasdaq composite index rose 46.31 points, or 1.88 percent, to 2,506.82.
Financial companies, which have been hit hard during the market’s recent downturn, performed strongly. Bank of America’s shares rose 51 cents, or 8.84 percent, to $6.28. Citigroup jumped $1.31, or 5.3 percent, to $26.02. Wells Fargo gained 87 cents, or 3.55 percent, to $25.37.
The benchmark 10-year Treasury note fell 29/32, to 101 6/32, and its yield rose to 1.99 percent, up from 1.89 percent late Wednesday.
The central bank moved to help European banks that are having trouble raising short-term cash, while the Bank of England decided to resume its bond purchases to help support a slowing British economy. Both central banks left their benchmark rates unchanged, at 1.5 percent for the euro area covered by the European Central Bank and 0.5 percent for Britain.
While most economists did not expect a rate cut, some said they were disappointed with the central bank’s actions, particularly because this was the last policy meeting to be headed by Jean-Claude Trichet, who will be replaced by Mario Draghi, governor of the Bank of Italy, on Nov. 1. Draghi will face pressure not to cut rates immediately to establish his credentials as an inflation fighter, analysts said.