U.S. Stocks Regaining Ground On Upbeat Retail Sales Data

Stocks have moved significantly higher over the course of morning trading on Friday, regaining ground following the pullback seen over the three previous sessions. The major averages have all shown strong moves back to the upside on the day.

The major averages have seen further upside in recent trading, reaching new highs for the session. The Dow is up 325.52 points or 1.1 percent at 28,819.72, the Nasdaq is up 110.55 points or 0.9 percent at 11,824.42 and the S&P 500 is up 30.32 points or 0.9 percent at 3,513.66.

The strength on Wall Street comes as much better than expected retail sales data has partly offset recent concerns the economic recovery may be stalling.

A report from the Commerce Department said retail sales spiked by 1.9 percent in September after rising by 0.6 percent in August. Economists had expected retail sales to climb by 0.7 percent.

Excluding a jump in sales by motor vehicles and parts dealers, retail sales still surged up by 1.5 percent in September after climbing by a downwardly revised 0.5 percent in August.

Ex-auto sales were expected to rise by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month.

Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, jumped by 1.4 percent in September after dipping by 0.3 percent in August.

Michael Pearce, Senior U.S. Economist at Capital Economics, said the strong retail sales growth “suggests the economy was carrying more momentum into the fourth quarter than anticipated, defying fears that the expiry of enhanced unemployment benefits in the summer would harm the economy.”

Adding to the positive sentiment, the University of Michigan released a report showing a bigger than expected improvement in consumer sentiment in the month of October.

The preliminary report said the consumer sentiment index rose to 81.2 in October from the final September reading of 80.4. Economists had expected the index to inch up to 80.5.

Meanwhile, traders have largely shrugged off a report from the Federal Reserve showing an unexpected decrease in industrial production in the month of September.

Buying interest was also generated after Pfizer (PFE) Chairman and CEO Albert Bourla said the drug giant will apply for emergency use of the Covid-19 vaccine it is developing with BioNTech (BNTX) soon after the safety milestone is achieved in the third week of November.

“All the data contained in our U.S. application would be reviewed not only by the FDA’s own scientists but also by an external panel of independent experts at a publicly held meeting convened by the agency,” Bourla said in an open letter.

The Dow is also benefiting from an advance by shares of Boeing (BA), which are moving sharply higher after Europe’s top aviation regulator told Bloomberg he’s satisfied changes made to the aerospace giant’s 737 Max have made the aircraft safe to fly.

Healthcare stocks have shown a strong move to the upside following the news about Pfizer’s coronavirus vaccine, driving the Dow Jones U.S. Health Care Index up by 1.5 percent.

Significant strength is also visible among biotechnology and pharmaceutical stocks, with the NYSE Arca Biotechnology Index and the NYSE Arca Pharmaceutical Index up by 1.7 percent and 1.5 percent, respectively.

Retail and software stocks are also seeing considerable strength on the day, while energy stocks have come under pressure amid a decrease by the price of crude oil.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index fell by 0.4 percent, while Hong Kong’s Hang Seng Index advanced by 0.9 percent.

Meanwhile, the major European markets have all shown strong moves to the upside on the day. While the French CAC 40 Index has jumped by 2.1 percent, the U.K.’s FTSE 100 Index is up by 1.7 percent and the German DAX Index is up by 1.5 percent.

In the bond market, treasuries have bounced back near the unchanged line after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 0.737 percent.

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