U.S. Stocks Rise After S&P 500 Rout as Retail Sales GainOliver Renick
U.S. stocks rebounded from the worst day in seven weeks, as better-than-forecast data on retail sales and unemployment boosted confidence in the economy to overshadow a renewed selloff in oil.
Benchmark indexes retreated from their highs of the day as oil dropped below $60 a barrel for the first time since 2009, erasing a rally in energy shares. Staples Inc. gained the most in the Standard & Poor’s 500 Index as consumer discretionary stocks rallied 0.7 percent as a group. Urban Outfitters Inc. jumped 7.6 percent, pacing gains among retail shares, which climbed 1 percent.
The S&P 500 added 0.5 percent to 2,035.33 at 4 p.m. in New York after climbing 1.5 percent earlier. The Dow Jones Industrial Average rose 63.19 points, or 0.4 percent, to 17,596.34, trimming a prior gain of 1.3 percent. About 7.2 billion shares traded hands on U.S. exchanges, 4.9 percent above the three-month average.
“When you see a big decline like we did yesterday we’re poised for a little bit of a bounce back and retail sales are helping,” Larry Peruzzi, the Boston-based director of international trading at Cabrera Capital Markets LLC, said by phone. “Globally, we’re still one of the bright spots. Retail sales are always an indication that consumers are feeling good.”
The S&P 500 slid 1.6 percent yesterday as a collapse in oil prices rippled through the financial markets, sending all 10 industry groups in the benchmark equity gauge down at least 1 percent. The Chicago Board Options Exchange Volatility Index, the measure of options prices known as the VIX, climbed 8.4 percent today after spiking 24 percent yesterday. The gauge has surged 70 percent in the past four days, the most since August
West Texas Intermediate crude fell 1.6 percent to settle at $59.95 a barrel, after yesterday plunging 4.5 percent. The rout caused concern over the strength of the global economy. Oil’s collapse into a bear market has been exacerbated as Saudi Arabia, Iraq and Kuwait, OPEC’s three largest members, offered the deepest discounts on exports to Asia in at least six years. The market will correct itself, according to Saudi Arabian Oil Minister Ali Al-Naimi.
Investors are gauging economic data before the Federal Reserve’s policy meeting next week.
Retail sales in the U.S. rose the most in eight months as shoppers benefited from an improving job market and cheaper fuel. The 0.7 percent gain in purchases matched the highest estimate of economists surveyed by Bloomberg and followed a 0.5 percent advance in October that was larger than previously reported, Commerce Department figures showed.
Jobless claims decreased by 3,000 to 294,000 in the week ended Dec. 6, a Labor Department report showed. The median forecast in a Bloomberg survey of economists called for first-time applications to hold at the prior week’s 297,000. Claims have been below 300,000 for 12 of the past 13 weeks.
The S&P 500 will continue to climb on the back of a solid U.S. economy paired with low inflation and a boost to consumers from lower oil prices, according to JPMorgan Chase & Co. The benchmark index will rise to 2,250 in 2015, head strategist Dubravko Lakos-Bujas wrote in a note today. That implies an 11 percent advance from yesterday’s close.
The strategist’s forecast amounts to a prediction that the U.S. market will keep having days like today, in which the S&P 500 is advancing even as concern grows about a default in Venezuela, Russia’s fifth interest-rate increase fails to stem the ruble’s worst rout since 1998 and Greek stocks cap a three-day retreat in which they lost 20 percent.
All of the 10 main groups in the S&P 500 advanced, with utility and consumer shares rising more than 0.7 percent to lead the advance.
Urban Outfitters surged 8.2 percent to $32.48, leading the surge among retailer stocks.
Staples advanced 8.7 percent to $16.10, the highest in a year. Starboard Value LP, the activist investor that successfully pushed for the merger of Office Depot Inc. and OfficeMax Inc. last year, disclosed a 5.1 percent stake in the company.
Keurig Green Mountain Inc. added 1.1 percent to $139.69 after renewing a partnership with Caribou Coffee Co. with a 10-year agreement for manufacturing, marketing, distribution and sale of Caribou in Keurig’s hot brewing system.
Energy stocks in the S&P 500 were little changed as a group, paring an earlier advance of as much as 2.5 percent. The group lost 3.1 percent yesterday as oil fell to a five-year low and the Organization of Petroleum Exporting Countries said global demand for crude will drop next year by about 300,000 barrels a day to 28.9 million, the least since 2003.
Diamond Offshore Drilling Inc. climbed 3.4 percent to $33.93, while Oneok Inc. jumped 2.3 percent to $45.67. Nabors Industries Ltd. dropped 3.1 percent.