Upbeat Data Contributes To Modest Strength On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved modestly higher during trading on Friday, offsetting the pullback seen over the course of the previous session. With the upward move on the day, the Dow and the Nasdaq climbed to new record closing highs.

The major averages ended the day in positive territory but off their best levels. The Dow crept up 30.71 points or 0.1 percent to 22,871.72, the Nasdaq rose 14.29 points or 0.2 percent to 6,605.80 and the S&P 500 inched up 2.24 points or 0.1 percent to 2,553.17.

For the week, the Dow climbed by 0.4 percent, while the Nasdaq and the S&P 500 both edged up by 0.2 percent.

The modest strength on Wall Street came following the release of some upbeat economic data, including a Commerce Department report showing a substantial increase in retail sales in the month of September.

The Commerce Department said retail sales surged up by 1.6 percent in September after edging down by a revised 0.1 percent in August.

Higher gas prices contributed to the jump in retail sales, as sales by gasoline stations soared by 5.8 percent during the month.

Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, rose by 0.4 percent.

The University of Michigan also released a report showing an unexpected improvement in consumer sentiment in the month of October.

The report said the consumer sentiment index jumped to 101.1 in October after dipping to 95.1 in September. Economists had expected the index to edge down to 95.0.

With the unexpected increase, the consumer sentiment index surged up to its highest level reaching 103.8 in January of 2004.

A separate report from the Labor Department showed consumer prices increased by slightly less than expected in the month of September.

The Labor Department said its consumer price index climbed by 0.5 percent in September after rising by 0.4 percent in August. Economists had expected prices to increase by 0.6 percent.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in September after edging up by 0.2 percent in August. Core prices had been expected to rise by another 0.2 percent.

Traders were also digesting the latest earnings news, including results from financial giants Bank of America (BAC) and Wells Fargo (WFC).

While Bank of America reported third quarter results that beat analyst estimates on both the top and bottom lines, Wells Fargo reported third quarter revenues that came in below expectations.

Sector News

Steel stocks showed a significant move to the upside on the day, as upbeat Chinese trade data has generated optimism about the outlook for demand.

Reflecting the strength in the steel sector, the NYSE Arca Steel Index surged up by 3.7 percent to its best closing level in over seven months,

Considerable strength was also visible among computer hardware stocks, as reflected by the 1.5 percent advance by the NYSE Arca Computer Hardware Index. The index reached its best closing level in two months.

HP Inc. (HPQ) led the hardware sector higher after the computer and printer maker provided upbeat full-year earnings guidance and announced a 5 percent increase in its dividend.

Oil service and semiconductor stocks also saw some strength on the day, while weakness among utilities and transportation stocks limited the upside for the markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index jumped by 1 percent, while China's Shanghai Composite Index edged up by 0.2 percent.

Meanwhile, the major European markets turned in another mixed performance on the day. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index dipped by 0.2 percent and 0.3 percent, respectively.

In the bond market, treasuries extended the upward move seen over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dropped by 4.3 basis points to 2.280 percent.

Looking Ahead

Housing data may attract attention next week, with traders likely to keep an eye on reports on homebuilder confidence, housing starts, and existing home sales.

Reports on regional manufacturing activity, industrial production, and import and export prices are also scheduled to be released.

The Federal Reserve is also due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

Earnings season will also pick up steam next week, with Goldman Sachs (GS), Johnson & Johnson (JNJ), Morgan Stanley (MS), IBM (IBM), American Express (AXP), Verizon (VZ), and General Electric (GE) among the companies due to report their quarterly results.