U.S. stocks rose, erasing a weekly loss for the Standard & Poor's 500 Index, as better-than- estimated retail sales and consumer confidence data bolstered optimism that the economic recovery is strengthening.
Macy's Inc. (M) and Best Buy Co. (BBY) climbed more than 2.6 percent after the Commerce Department reported that sales at U.S. retailers increased 1.3 percent in November, more than double the median economist estimate in a Bloomberg survey. Alcoa Inc. (AA) rallied 8.2 percent after JPMorgan Chase (JPM) increased its earnings estimate. Delta Air Lines Inc. (DAL) led the Amex Airline Index up 6.3 percent, its best gain since September, as a stronger dollar pushed oil below $70 a barrel.
"There were concerns going in, because same-store sales have been weak especially for the department stores, that this number might be at risk, so it's definitely positive for the market," said Noman Ali, part of a group that manages $3 billion of U.S. equities at MFC Global Investment Management Inc. in Toronto.
The S&P 500 added 0.4 percent to 1,106.41 as of 4:05 p.m. in New York. The Dow Jones Industrial Average climbed 65.67 points, 0.6 percent, to 10,471.5. Almost five stocks rose for every two that dropped on the New York Stock Exchange.
Retailers in the S&P 500 climbed 1.3 percent as a group after the Commerce Department data signaled that consumer spending is gathering speed heading into 2010, while the Reuters/University of Michigan index of consumer sentiment rose to a preliminary 73.4 for December from 67.4.
Weekly Loss Erased The S&P 500 added less than 0.1 percent this week as gains over the past three days erased losses on Dec. 7 and 8 after a downgrade of Greece's credit rating added to concerns that governments globally have amassed too much debt.
The index has climbed 64 percent since March 9 as a four- quarter economic contraction ended. The nine-month rally pushed valuations in the S&P 500 to about 22 times its companies' reported operating earnings, near the highest since 2002, Bloomberg data show.
Thomas Lee, head of U.S. equity strategy at JPMorgan Chase & Co., forecast the S&P 500 will end next year at 1,300, up almost 18 percent from its close yesterday. Lee's forecast a year ago for 2009 was 1,100. He raised it to 1,160 on Nov. 20. Lee in a report said investors "remain too pessimistic regarding the durability and trajectory of 2010 U.S. growth as well as valuation upside."
European and Asian shares advanced after China's factory output climbed 19.2 percent from a year earlier, the statistics bureau said in Beijing. That was more than the 18.2 percent median estimate in a Bloomberg News survey of 25 economists.