Retail surprise sends market higher
NEW YORK – Wall Street moved sharply higher Wednesday after the Commerce Department reported an unexpected increase in retail sales last month and eased some concerns about consumers’ willingness to spend despite economic uncertainty. The Dow Jones industrials rose nearly 180 points.
The 0.3 percent rise in January retail sales, which followed a drop during December, alleviated some of the market’s worries that consumers were retrenching because of rising fuel prices, a faltering real estate sector and a choppy stock market. Analysts had expected a 0.3 percent decline in January sales.
However, another report from the department showed that U.S. business inventories grew slightly more than expected in December. The data could be a sign of an involuntary buildup of unsold goods on store shelves amid the economic slowdown.
The inventories report was not enough to offset optimism during the session. Stocks have mostly risen in recent days as investors tried to determine whether Wall Street has reached a bottom after months of declines related to the housing and credit crisis, or whether further sluggishness in the economy will send stocks lower.
“So far this week there has been a positive bias, but I think what you’re seeing is people taking a very cautious approach,” said Scott Fullman, director of investment strategy at I.A. Englander & Co. “There is no great rush to jump in, and the preservation of capital is more important than growth at this moment.”
He also said investors were encouraged by the government’s latest plan to help homeowners falling behind on mortgage payments. U.S. Treasury Secretary Henry Paulson said Wednesday he believes the economy will remain on a growth path, and pledged “aggressive action” to help troubled homeowners.
The Dow rose 178.83, or 1.45 percent, to 12,552.24. The blue chip index finished at its highs of the session.
Broader indexes also moved higher. The Standard & Poor’s 500 index added 18.35, or 1.36 percent, to 1,367.21, and the Nasdaq composite rose 53.89, or 2.32 percent, to 2,373.93.
Overseas, Japan’s Nikkei stock average closed up 0.16 percent. Britain’s FTSE 100 fell 0.51 percent, Germany’s DAX index rose 0.08 percent, and France’s CAC-40 rose 0.30 percent.