Wall St boosted by upbeat retail giants
US stocks rose yesterday, rebounding after sharp losses in the previous session, as better-than-expected results from big retailers encouraged investors to get back into the market.
Results at consumer giants Home Depot, Target and department store operator Saks were helped by cost-cutting as revenue growth remained slack. The trend has dominated earnings season, but investors generally approved, bidding stocks higher.
The earnings reports offset an unexpected drop in housing starts and permits in July, sending all three major indexes up more than 1 per cent in earlier trading.
The Dow Jones industrial average was up 82.60 points, or 0.90 per cent, at 9,217.94. The Standard & Poor’s 500 Index was up 9.94 points, or 1.01 per cent, at 989.67. The Nasdaq Composite Index was up 25.08 points, or 1.30 per cent, at 1,955.92.
Financial, retail and technology stocks were the top advancers, but gains were broad-based.
Mohamed El-Erian, however, the chief executive of bond fund manager Pacific Investment Management, said that the rally in has topped out, as valuations are running ahead of fundamentals.
The S&P 500 financial sector index, which suffered the most in Monday’s sell-off, was up 1.92 per cent.
American Express gained 4.3 per cent to $31.69 and Bank of America closed up 2.1 per cent at $16.90. Citigroup rose 3.5 per cent to $4.14.
Home Depot shares rose 3.1 per cent to $26.93 while its key rival, Lowe’s, dropped 2.3 per cent to $19.99 following a sell-off the previous day on disappointing results.
Target climbed 7.6 per cent to $44.32 and Saks added 6.9 per cent to $5.72. The S&P retail index gained was up 1.8 percent.
The Nasdaq outpaced the other indexes after RBC highlighted investment opportunities in the smartphone market and raised its price target on shares of Apple, Research in Motion and Palm. Apple’s shares climbed 2.8 per cent to $164.01, RIM added 4.6 per cent to $73.99 and Palm climbed 4.9 per cent to $13.88.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 4 to 1, while advancing stocks beat decliners on the Nasdaq by 3 to 1.