NEW YORK (AP) – Wall Street soared Thursday, propelling the Standard & Poor’s 500 index and Dow Jones industrials to record highs as bright spots among generally sluggish retail sales allowed investors to toss aside concerns about the health of the economy.
The rally, which included the Dow’s biggest one-day percentage gain in nearly four years, was perhaps surprising given that there was no extraordinary announcement or other catalyst usually seen with such a huge gain, and that it came before most companies have announced their second-quarter earnings.
The rise marked a sharp contrast to the start of the week, when stocks fell amid concerns that some hedge funds could succumb to ill-placed bets on the housing sector.
But investors, heartened by signs of a happy and spending consumer, clearly decided to put some bets on the table. Though retail sales appeared to be crimped last month by higher gasoline prices and a tepid housing market, and the outlook for the coming months was difficult to ascertain, the overall reading wasn’t as dour as some investors expected.
Several reports beat Street expectations – notably that of Wal-Mart Stores Inc., the world’s largest retailer, which posted a better-than-expected 2.4 percent jump in sales at stores open at least a year.
“It’s relief that things weren’t as bad as people expected,” said Bill Schultz, chief investment officer at McQueen, Ball & Associates, referring to the retailers’ reports and the economy at large. “We’re maybe getting slower growth but not the fall-of-the-cliff economic scenarios,” he said of investors’ reading of the economy. But, Schultz said, “I think it is, over the near-term, a little bit over done, certainly on a two-day basis,” he added, referring to the rally.
The S&P 500 rose 28.94, or 1.91 percent, to 1,547.70, above its record close of 1,539.18, set June 4.
The Dow shot up 283.86, or 2.09 percent, to 13,861.73; its previous record close was 13,676.32, also set June 4. The increase was the biggest percentage gain for the blue chip index since October 2003 and the biggest point gain since October 2002. The Dow also reached a new trading high of 13,869.94.
The Nasdaq composite index rose 49.94, or 1.88 percent, to 2,701.73; Thursday’s gain was the biggest percentage increase since March, and the last time the Nasdaq closed at around Thurday’s level was Feb. 1, 2001. The index, bloated by the 1990s tech boom, is nowhere near its closing record of 5,048.62, set in March 2000.
The report from Wal-Mart, one of the 30 companies that make up the Dow, helped ease some investors’ worries about the health of the consumer ahead of the Commerce Department’s report on U.S. retail sales, released today.
“This is the first positive month Wal-Mart has had in a while,” said Doug Roberts, chief investment strategist for investment research company Channel Capital Research, citing one reason for the market’s move higher.
Trading is likely to remain volatile while the market awaits the bulk of second-quarter earnings reports. Analysts are keeping expectations low – especially after profit warnings this week from cell phone maker Motorola Inc., and retailers Home Depot Inc. and Sears Holdings Corp.