Dow closes up 93 points on good retail news
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orld markets managed modest gains Thursday, shrugging off a weak U.S. growth report and an interest rate hike in China.
NEW YORK — A rebound in retail sales and stronger jobs reports are pushing stocks near their highest levels of the year.
Retailers reported their best June sales in more than a decade. Warm weather and discounts helped bring shoppers back to stores.
The number of people who applied for unemployment benefits fell to a seven-week low last week. Private companies added more than double the number of employees that economists expected last month.
The Dow is closing with a gain of 93 points, or 0.7 percent, to 12,719. The S&P 500 is up 14, or 1 percent, at 1,353. The Nasdaq composite is up 39, or 1.4 percent, at 2,873.
Four stocks rose for every one that fell on the New York Stock Exchange. Volume was average at 3.6 billion shares.
Separately, payroll processor Automatic Data Processing said companies added 157,000 employees in June. The bulk of the hiring came from small businesses. The tally is more than double the number economists had forecast and far more than the 36,000 added the previous month.
The news comes a day before the Labor Department releases its closely-watched monthly employment report. Economists estimate the unemployment rate will remain at 9.1 percent and that employers added only 90,000 jobs last month.
A jump in sales at U.S. retailers also lifted stock prices. Warm weather and deep discounts resulted in the best June sales figures for U.S. retailers since 1999. Kohl's Corp. rose nearly 8 percent, the most of any stock in the S&P 500 index, after sales increased by double what analysts predicted. Target Corp. was close behind with a gain of 7 percent.
Investors have been concerned that high gas prices would constrain consumer spending as people made fewer shopping trips and looked for ways to save money. The higher sales figures reassured markets that consumers were becoming more willing to spend again.
"The closest thing to an unadulterated barometer of our progress is same-store sales," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago "Everything is tied to it: Sales drives profits, profits drive hiring and hiring drives sales. It's a neat, virtuous circle."
The Dow Jones industrial average gained 119 points, or 1 percent, to 12,745 in afternoon trading. The Standard and Poor's 500 index added 16 points, or 1.2 percent, to 1,356. The Nasdaq composite hit a new high for the year of 2877 after gaining 1.5 percent.
The Dow and S&P 500 index reached their highest levels of 2011 on April 29. Since then, each index fell as much as 8 percent as a result of higher gas prices and a slowdown in the economy brought on by a shortage of parts from Japan and bad weather in the South.
Just three weeks ago, the S&P index had given up nearly all of its gains for the year. A rebound in a key manufacturing index and stronger sales figures from Nike Inc. and other companies pushed the index up nearly 6 percent since June 15th. The Dow and S&P 500 are now up 2.5 percent so far this month.
Trading has been very light in the stock market this week. Markets were closed in the U.S. on Monday for the July 4th holiday. No major corporate earnings came out this week. Aluminum maker Alcoa Inc. becomes the first major U.S. company to report second-quarter earnings on Monday.
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