Stocks closed higher on Wall Street on Tuesday as investors looked at strong earnings reports from large retailers and a surprisingly strong report on consumer spending.
The government reported that Americans largely ignored the higher prices last month and increased their spending in retail stores and online. The Commerce Department said retail sales rose 1.7% in October. This is the biggest gain since March and up from 0.8% the month before.
“This reiterates the strength of the American consumer, but you have to wonder a little, as inflation expectations rise, if people are rushing to face it,” 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 record set on November 8. The Dow Jones Industrial Average rose 54.77 points, or 0.2%, to 36,142.22. The Nasdaq gained 120.01 points, or 0.8%, to 15,973.86.
Tech stocks did 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 have made solid gains. The Home Depot rose 5.7% after the home improvement retailer reported higher sales and strong third-quarter profits in a hot housing market. The results also increased competitor Lowe’s by 4.2%.
Several businesses that depend on consumer spending have grown. The Etsy online craft market grew 5.1%. Nike rose 1.8% while Tapestry, parent of Coach and Kate Spade, gained 1.5%.
The nation’s largest retailer, Walmart, also reported strong financial results while raising its profit forecast, but the stock fell 2.5% and returned some of the big gains it has made in recent years. weeks.
Several other large retailers will release their latest financial results this week. Target reports its results Wednesday and Macy’s reports its results Thursday.
Healthcare businesses have also grown. Communications companies and manufacturers of housewares and other consumer products have lagged behind the market.
Bond yields edged up. The 10-year Treasury yield rose to 1.64% from 1.62% on Monday night.
Investors received another encouraging economic update from the Federal Reserve, which said industrial production rebounded in October with a gain of 1.6%. The gain follows a 1.3% drop in September.
Wall Street is closely watching the latest economic reports for more clues as to how businesses and consumers are dealing with rising inflation. Companies have raised their prices as they face higher raw material costs and supply chain issues. Consumers are willing to pay higher prices for many products, although analysts fear consumers may eventually cut back on spending due to inflation.
Heightened inflation concerns stumbled the entire market last week after a strong run that lasted several weeks, with companies reporting mostly strong earnings. The latest round of earnings is coming to an end and the market has very few singular events or economic reports to focus on until the end of the year.
“This inflation story is going to be big over the next six months and we’re going to have a lot of stops and starts as it evolves,” Stritch said.