According to the Associated Press, stocks rose on Wall Street on Tuesday as investors reviewed their potential relationship to earnings and rising inflation.
A wide range of companies that rely on consumer spending led gains on Tuesday, as Americans ramped up their spending in retail stores and online last month. According to the Commerce Department, retail sales rose 1.7 percent in October, the biggest since March and a 0.8 percent increase in the previous month.
Wall Street is closely monitoring new reports on how businesses and consumers are dealing with rising inflation. Companies are raising prices as they face higher costs for raw materials and supply chain problems. Consumers continue to buy even with higher prices, although analysts believe that increased prices may eventually lead to consumers cutting back on spending.
“The inflation story for the next six months is going to be big and we will have a lot of stops and starts at that,” said Mike Stritch, chief investment officer at BMO Wealth Management.
For more reporting from the Associated Press, see below.
Rising concerns over inflation rattled the broader market last week after a strong run that lasted several weeks as companies reported mostly solid earnings. The latest earnings round is nearing its end and the market has very few singular events or economic reports to focus on by the end of the year.
The S&P 500 was up 0.6 percent as of 2:53 p.m. Eastern. The Dow Jones Industrial Average ended 131 points, or 0.4 per cent, higher at 36,218 and the Nasdaq gained 0.8 per cent.
Technology stocks posted some broad gains. Chipmaker Qualcomm rose 6.6 per cent.
Home Depot rose 6 percent in the third quarter after the home improvement retailer reported growth in sales and solid profits amid a heated housing market. The results even outperformed competitor Lowe’s by 4.5 percent.
Health care companies also grew. Communications companies and manufacturers of home goods and other consumer staples lagged the market.
Bond yields rose. The yield on the 10-year Treasury rose to 1.63 percent from 1.62 percent late Monday.
“It reiterates the strength of the US consumer, but you have to wonder a little bit as inflation expectations are rising, are people rushing to face that?” Stritch said.
Many companies that depended on consumer spending boomed. Online craft marketplace Etsy rose 5.3 percent. Nike rose 1.9 percent while Coach and Kate Spade parent tapestry rose 2 percent.
The nation’s largest retailer, Walmart, also reported solid financial results, raising its profit forecast, but the stock gave back some of the big gains it made over the past few weeks.
Several other large retailers will release their latest financial results this week. Target reports its results on Wednesday and Macy’s reports results on Thursday.
Investors received another encouraging economic update from the Federal Reserve, which said industrial production resumed in October, up 1.6 percent. The gains followed a 1.3 percent drop in September.