Shares soar on Wall Street after retail sales make big gains – News-Herald

By DAMIAN J. TROISE

Shares closed higher on Wall Street on Tuesday after investors reviewed solid earnings reports from major retailers and a surprisingly strong consumer spending report.

The government reported that last month Americans largely shrugged off higher prices and ramped up spending in stores and online. The Commerce Department said retail sales rose 1.7% in October. That is the biggest gain since March and an increase from 0.8% in the previous month.

“It confirms the strength of the US consumer, but you have to kind of wonder if people are rushing to get ahead of that as inflation expectations rise,” said Mike Stritch, chief investment officer at BMO Wealth Management.

The S&P 500 index rose 18.10 points, or 0.4%, to 4,700.90 and is just below the November 8 record. The Dow Jones Industrial Average rose 54.77 points, or 0.2%, to 36,142.22. The Nasdaq rose 120.01 points, or 0.8%, to 15,973.86.

Technology stocks did much of the heavy lifting for the benchmark S&P 500, which had slightly more winners than losers. Chipmaker Qualcomm rose 7.9%.

A wide range of businesses that depend on consumer spending posted solid gains. Home Depot was up 5.7% after the home improvement retailer reported rising sales and solid profits in the third quarter amid a hot housing market. The results also increased competitor Lowe’s by 4.2%.

Several businesses that depend on consumer spending rose. Online craft marketplace Etsy was up 5.1%. Nike was up 1.8%, while Coach and Kate Spade, older Tapestry, won 1.5%.

The country’s largest retailer, Walmart, also reported solid financial results and raised its earnings forecast, but its stock fell 2.5%, returning some of the big gains it’s made in recent weeks.

Several other major retailers will release their latest financial results this week. Target reports its results on Wednesday and Macy’s reports results on Thursday.

Healthcare companies also rose. Communications companies and manufacturers of household goods and other consumer goods lagged the market.

Bond yields rose higher. The 10-year Treasury yield rose to 1.64% from 1.62% at the end of Monday.

Investors received another encouraging economic update from the Federal Reserve, which said industrial production recovered in October with a gain of 1.6%. Earnings followed a 1.3% decline in September.

Wall Street is closely monitoring the latest economic reports for more clues about how businesses and consumers are coping with rising inflation. Companies have increased prices as they face higher raw material costs and supply chain problems. Consumers have been willing to pay the higher prices for many commodities, although analysts fear that consumers could eventually fall back on their spending due to inflation.

Heightened inflation concerns sent the broader market skyrocketing last week after a strong run that continued for several weeks, with companies mainly reporting solid gains. The latest round of earnings is nearing its end and the market has few special events or economic reports to focus on until the end of the year.

“That inflation story is going to be big over the next six months and we’ll be stopping and starting a lot as it evolves,” Stritch said.