U.S. Stocks Seeing Modest Strength On Upbeat Economic Data

wallstreet sept27 16nov21 lt

Stocks have moved modestly higher in morning trading on Tuesday, with the major averages all moving to the upside after ending the previous session roughly flat. Buying interest has remained somewhat subdued, however, limiting the advance by the markets.

Currently, the major averages are holding on to slim gains. The Dow is up 114.21 points or 0.3 percent at 36,201.66, the Nasdaq is up 41.11 points or 0.3 percent at 15,894.96 and the S&P 500 is up 12.02 points or 0.3 percent at 4,694.82.

The modest strength on Wall Street partly reflects a positive reaction to some upbeat U.S. economic data, including a Commerce Department report showing retail sales shot up by more than expected in the month of October.

The report said retail sales spiked by 1.7 percent in October after climbing by an upwardly revised 0.8 percent in September.

Economists had expected retail sales to jump by 1.4 percent compared to the 0.7 percent increase originally reported for the previous month.

Excluding sales by motor vehicles and parts dealers, retail sales still surged up by 1.7 percent in October after rising by 0.7 percent in September. Ex-auto sales were expected to advance by 1.0 percent.

However, analysts noted that the strong retail sales growth during the month was largely due to inflation, as retail sales are reported in nominal dollars.

"Adjusted for inflation, real sales were closer to a 0.1% headline increase and ex-gasoline a 0.3% increase," said Will Compernolle, Senior Economist at FHN Financial. "The inflation-adjusted spending is still above the pre-pandemic trend but slowing."

The Federal Reserve also released a report showing industrial production rebounded by much more than expected in the month of October.

The report showed industrial production surged up by 1.6 percent in October after tumbling by 1.3 percent in September. Economists had expected industrial production to increase by 0.7 percent.

The Fed said about half of the rebound in industrial production in October reflected a recovery from the effects of Hurricane Ida.

The Dow is benefiting from a notable advance by shares of Home Depot (HD), with the home improvement retailer jumping by 4.4 percent after reporting better than expected quarter results.

Meanwhile, retail giant Walmart (WMT) has moved to the downside despite reporting third quarter results that exceeded analyst estimates and raising its full-year guidance.

Despite the uptick by the broader markets, most of the major sectors are showing only modest moves in morning trading.

Housing stocks are seeing notable strength, however, with the Philadelphia Housing Sector Index climbing by 1.2 percent.

The strength in the sector comes after the National Association of Home Builders released a report unexpectedly showing a continued improvement in U.S. homebuilder confidence in the month of November.

The report showed the NAHB/Wells Fargo Housing Market Index rose for the third straight month, climbing to 83 in November from 80 in October. The increase surprised economists, who had expected the index to come in unchanged.

On the other hand, tobacco stocks are giving back ground after moving sharply higher over the two previous session, resulting in a 1.2 percent drop by the NYSE Arca Tobacco Index.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while China's Shanghai Composite Index fell by 0.3 percent.

The major European markets have also turned mixed on the day. While the U.K.'s FTSE 100 Index has dipped by 0.3 percent, the French CAC 40 Index is up by 0.4 percent and the German DAX Index is up by 0.6 percent.

In the bond market, treasuries have moved modestly higher over the course of the morning. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.9 basis points at 1.604 percent.

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