Stocks Move Sharply Higher On Upbeat Retail Sales Data – U.S. Commentary

Stocks moved sharply higher over the course of the trading session on Monday following the notable pullback seen last week. While the major averages all moved to the upside, the Dow underperformed its counterparts due to a steep drop by Boeing (BA).

The major averages finished the session near their best levels of the day. The Dow climbed 200.64 points or 0.8 percent to 25,650.88, while the Nasdaq soared 149.92 points or 2 percent to 7,558.06 and the S&P 500 jumped 40.23 points or 1.5 percent to 2,783.30.

The rally on Wall Street came following the release of a report from the Commerce Department showing an unexpected uptick in U.S. retail sales in January.

The Commerce Department said retail sales rose by 0.2 percent in January after tumbling by a revised 1.6 percent in December.

Economists had expected retail sales to come in unchanged compared to the 1.2 percent slump originally reported for the previous month.

Excluding a steep drop in auto sales, retail sales climbed by 0.9 percent in January after plummeting by a revised 2.1 percent in December.

Ex-auto sales had been expected to increase by 0.3 percent compared to the 1.8 percent plunge originally reported for the previous month.

Closely watched core retail sales, which exclude autos, gasoline, building materials and food services, also jumped by 1.1 percent in January after plunging by 2.3 percent in December.

A separate Commerce Department reported showed business inventories increased in line with economist estimates in the month of December.

Meanwhile, the upside for the Dow was limited by a significant decrease by shares of Boeing, with the aerospace giant slumping by 5.3 percent.

Boeing came under pressure following the crash of Ethiopian Airlines Flight 302, which was the second crash in five months involving the company’s 737 Max 8 model.

Sector News

Tobacco stocks moved sharply higher over the course of the trading session, driving the NYSE Arca Tobacco Index up by 3.4 percent. With the spike, the index reached a four-month closing high.

Substantial strength was also visible among oil service stocks, which moved higher along with the price of crude oil.

With crude for April delivery climbing $0.72 to $56.79 a barrel, the Philadelphia Oil Service Index surged up by 2.9 percent.

Technology stocks also saw considerable strength on the day, contributing to the significant advance by the tech-heavy Nasdaq.

Computer hardware and semiconductor stocks turned in some of the tech sector’s best performances, with the NYSE Arca Computer Hardware Index and the Philadelphia Semiconductor Index jumping by 2.8 percent and 2.4 percent, respectively.

Steel, biotechnology, transportation and retail stocks also moved notably higher amid broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan’s Nikkei 225 Index climbed by 0.5 percent, while Hong Kong’s Hang Seng Index jumped by 1 percent.

The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index rose by 0.3 percent, the French CAC 40 Index and the German DAX Index advanced by 0.7 percent and 0.8 percent, respectively.

In the bond market, treasuries pulled back modestly after trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.8 basis points to 2.643 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to the Labor Department’s closely watched report on consumer price inflation in the month of February.

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