Stocks Close Mostly Higher Following Upbeat Retail Sales Data - U.S. Commentary

(RTTNews) - Following the mixed performance seen in the previous session, stocks moved mostly higher over the course of the trading day on Tuesday. With the upward move, the Dow climbed to another new record closing high.

The major averages ended the day firmly in positive territory. The Dow rose 54.37 points or 0.3 percent to 18,923.06, the Nasdaq jumped 57.23 points or 1.1 percent to 5,275.61 and the S&P 500 climbed 16.19 points or 0.8 percent to 2,180.39.

The strength on Wall Street came following the release of a report from the Commerce Department showing that retail sales increased by more than expected in the month of October.

The report said retail sales climbed by 0.8 percent in October after jumping by an upwardly revised 1.0 percent in September.

Economists had expected sales to rise by 0.6 percent, matching the increase originally reported for the previous month.

Excluding an increase in auto sales, retail sales still climbed by 0.8 percent in October following a 0.7 percent increase in September. Ex-auto sales had been expected to rise by 0.5 percent.

Additionally, the report said closely watched core retail sales, which exclude autos, gasoline, building materials and food service, increased by 0.8 percent in October after rising by 0.3 percent in September.

"It hardly needs saying, but this report solidifies the Fed's case for a December rate hike," said Chris Low, chief economist at FTN Financial. "Just one report, November employment, might change their mind now barring a market meltdown."

Traders were also reacting to a sharp increase by the price of crude oil, with crude for December delivery spiking $2.49 to $45.81 a barrel.

The spike by the price of crude oil came amid optimism that the members of OPEC will finalize an agreement on cutting production later this month.

Sector News

Energy stocks showed a substantial move to the upside on the day, benefiting from the sharp increase by the price of crude oil.

Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index surged up by 4.1 percent, the Philadelphia Oil Service Index jumped by 3.5 percent and the NYSE Arca Oil & Gas Index shot up by 2.5 percent.

Significant strength was also visible among gold stocks, as reflected by the 4.5 percent gain posted by the NYSE Arca Gold Bugs Index. The strength in the sector came as gold for December delivery rose $2.80 to $1,244.50 an ounce.

Semiconductor, internet and software stocks also saw considerable strength on the day, contributing to the notable advance by the tech-heavy Nasdaq.

Meanwhile, steel came under pressure, giving back some ground after rallying in reaction to President-elect Donald Trump's surprise victory.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan's Nikkei 225 Index closed just below the unchanged line, while Hong Kong's Hang Seng Index climbed by 0.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index rose by 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both advanced by 0.6 percent.

In the bond market, treasuries showed a lack of direction for much of the session before closing modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.6 basis points to 2.238 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to reports on producer prices, industrial production, and homebuilder confidence.

On the earnings front, retail giants Lowe's (LOW) and Target (TGT) are due to report their quarterly results before the start of trading on Wednesday.