Retail report sees US stocks climb

Wall Street closed its third winning week in a row with another rally today, advancing as a new retail sales report and a consumer confidence reading showed that Americans are growing more confident about the economy.

The latest Commerce Department report said retail sales rose 0.2% in October, a respectable gain considering that vehicle sales dropped 2.2%.

Without car sales, retail sales would have been up a healthy 0.9%, although lack of spending on such big-ticket items worried some investors.

Stabilising crude oil futures once again helped stocks. A barrel of light crude settled at 47.32, down 10 cents, on the New York Mercantile Exchange.

“The retail report, along with oil and the elections and the economy, they’ve all contributed to a very nice run we’ve had, and should continue to have through the end of the year,” said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers in Boston.

“But oil, in particular, could still be a problem. It’s been driven by demand, not by problems with supply, and a big spike in demand or a big supply problem on top of that could be a big shock to the system.”

The Dow Jones industrial average rose 69.17, or 0.66%, to 10,539.01.

It was the Dow’s best close since April 6, and the index also climbed back into positive territory for the year to date.

Broader stock indicators also advanced, with the Standard & Poor’s 500 index posting a new 2-year high. The S&P 500 was up 10.69, or 0.91%, at 1,184.17, its best close since August 24, 2001. The index hit its first post-9/11 high on Thursday.

The Nasdaq composite index gained 24.07, or 1.17%, to 2,085.34, its best showing since February 11.

Wall Street finished its third straight week in positive territory thanks to broad buying across all sectors.

While the post-election rally continued, the exuberance of investors in the past two weeks was replaced by more caution, though lower oil prices and a reassuring statement from the Federal Reserve helped fuel steady buying.

For the week, the Dow gained 1.46%, the S&P 500 rose 1.54% and the Nasdaq climbed 2.28%.

Analysts said today’s retail sales figures showed that consumers’ view of the economy was improving just in time for the holiday shopping season.

That was confirmed by the University of Michigan’s consumer sentiment index, which posted a preliminary 95.5 reading for November, up from 91.7 in October and far better than the 93 reading Wall Street had expected.

The Commerce Department report boosted retail stocks, with discount retailer Target rising 1.25 to 52.02 and Dow Jones Industrial component Wal-Mart Stores climbing 23 cents to 56.85.

Shares of major car manufacturers were mixed following the report. Ford lost 2 cents to 14.23, while General Motors was up 31 cents at 40.21.

Dell gained 3.19 to 40.44 after the computer manufacturer posted record third quarter sales and a 25% increase in profits. The company’s results were in line with Wall Street estimates.

Dell also said it would see $60 billion in annual revenues by 2006, a year ahead of schedule. The company’s confidence could help revive flagging interest in computer stocks overall, analysts said.

“It wasn’t necessarily the numbers that got them moving, it was their tone and confidence in their report,” said Keith Keenan, vice president of institutional trading at Wall Street Access.

“Dell has managed to become the Wal-Mart of the PC space, with excellent service and really low costs. They’re proving you can turn a serious profit.”

Pixar Animation Studios, producer of Finding Nemo and The Incredibles, beat Wall Street’s profit forecasts by 14 cents per share on the strength of its home video sales. Pixar surged 6.60 to 86.54.

Advancing issues outnumbered decliners by about 5 to 2 on the New York Stock Exchange, where volume totalled 1.54 billion shares, compared with 1.39 billion on Thursday.

The Russell 2000 index of smaller companies was up 5.68, or 0.92%, at 621.98.