Retail Sales, Earnings Reports Drive Rally

Associated Press
Friday, February 6, 2009

NEW YORK, Feb 5 -- Investors shook off weak economic readings Thursday and placed bets on retail and technology stocks after several companies posted better-than-expected sales and profit reports.

The Dow Jones industrial average rose 106.41, or 1.3 percent, to close at 8063.07. The blue chips fell as much as 111 points early in the session. Broader stock indicators also rose. The Standard & Poor's 500-stock index rose 13.62, or 1.6 percent, to 845.85, and the Nasdaq composite index rose 31.19, or 2.1 percent, to 1546.24.

Retailers including Wal-Mart Stores and Macy's turned in better-than-expected sales figures for January. Wal-Mart's sales beat Wall Street's forecasts as the chain drew shoppers focused on necessities like groceries. Macy's, which earlier this week said it would slash 7,000 jobs, on Thursday raised its fourth-quarter and full-year forecasts after reporting its sales. Wal-Mart rose $2.14, or 4.6 percent, to $48.56, while Macy's rose 43 cents, or 5.2 percent, to $8.75.

The industry's overall numbers were still weak as consumers again curtailed their spending, but not as bad as investors feared when they beat retail stocks down in recent months.

"We're being overly pessimistic on things like retailers," said Christopher J. Cordaro, chief investment officer at RegentAtlantic Capital in Morristown, N.J. "People realize you're going to have shop somewhere."

The reports helped the market overcome a flurry of bad economic news. Unemployment benefits claims rose last week to a 26-year high, and factory orders fell for the fifth straight month in December. However productivity rose by 3.2 percent in the fourth quarter, more than twice what analysts expected.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, fell to 2.92 percent, from 2.94 percent late Wednesday. The yield on the three-month T-bill dropped to 0.26 percent, from 0.28 percent.

Financial stocks recovered from early losses and helped lift the market following speculation the government could funnel aid to regional banks. J.P. Morgan Chase rose 50 cents, or 2.1 percent, to $24.54, and PNC Financial Services Group rose $1, or 3.5 percent, to $29.83.

The dollar was mostly higher against other major currencies. Gold prices also climbed.

Light, sweet crude rose 85 cents to settle at $41.17 a barrel on the New York Mercantile Exchange.

© 2009 The Washington Post Company