Wall Street Rallies 1% on Retail Sales Data as Fed Decision Nears

Nichole Harper
15 Sep, 2015
New York City

Market indexes on Wall Street advanced more than 1% after August retail sales advanced more than expected indicating that the latest market turbulence had little impact on the consumer. S&P 500 index remained 4% down for 2015.

[R]5:00 PM New York City, New York – Market indexes on Wall Street advanced more than 1% after August retail sales advanced more than expected indicating that the latest market turbulence had little impact on the consumer. S&P 500 index remained 4% down for 2015.[/R]

U.S. stocks advanced on healthy retail sales increase in August and investors turned more optimistic that the Fed may delay the much talked about possible rate hike after the meeting this week.

Retail sales in August adjusted for seasonality and calendar increased 0.2% to $447.7 billion from July and jumped 2.2% from a year ago month.

Total retail sales in three months to August soared 2.2% from a year ago period, the Department of Commerce said.

Separately, the department reported Inventories at the end of July rose 0.1% from June to $1,812.4 billion and jumped 2.6% from a year ago month.

Sales in July increased 0.1% to $1,328 billion from June but declined 2.7% from a year ago month.

August industrial production growth fell to 0.4% from 0.9% increase in July. Manufacturing production slid 0.9%, mining output fell 0.6% and utility output rose 0.6%, Federal Reserve Bank reported.

The reserve bank said total industrial production in August grew 0.9% from a year earlier and capacity utilization for total industry slid to 77.6%.

On Wall Street, Tollbooth Strategy Index increased 74.13 or 0.7% to 10,372.50.

S&P 500 index gained 18.13 or 0.9% to 1,971 and the Nasdaq Composite Index rose 39.63 or 0.8% to 4,845.23.

Crude oil in New York added 73 cents to $44.73 a barrel and gold fell $4.20 to $1,103.50 an ounce.

U.S. Movers

Gray Television, Inc ((GTN)) surged 13.8% or $1.62 to $13.36 after the broadcasting company agreed to acquire all television and radio stations owned by privately-held Schurz Communications, Inc for about $442.5 million.

GTT Communications Inc ((GTT)) soared 6.8% or $1.53 to $24.03 after the cloud networking services provider agreed to acquire a data and internet protocol services provider One Source Networks for $175 million.

European Markets

Markets in Europe closed higher but investors remained anxious ahead of the U.S. rate decision on Thursday.

Resource sector linked companies declined after coal and copper prices fell to lows not seen since the financial crisis of 2008-2010.

Glencore, the Switzerland-based commodities giant dropped as much as 9% in trading before recovering after copper and coal prices fell to six-year lows.

In addition, German utilities, E.ON and RWE declined after a report from Spiegel Online reported the companies fell short by as much as €30 billion in reserves to dispose of nuclear waste.

E.ON said the utility has sufficient reserves to deal with the waste disposal and nuclear power closures.

Germany has directed utilities to end nuclear power production and switch to alternative forms of energy.

UK producer prices index for all manufactured products increased 1.8% in August from 1.6% increase in July. Output price rose 0.4% in August from the previous month from 0.1% increase in July.

Separately, the department said UK annual inflation measured at consumer prices dropped back to breakeven in August from the 0.1% increase in July.

The clothing, soft drinks and furniture prices rose slightly but motor fuel prices and sea fares declined slightly.

First estimate of the euro zone trade surplus with rest of the world jumped to €31.4 billion in July from €21.2 billion in a year ago month.

In the wider region of EU28, the trade surplus surged to €12.9 billion in June with rest of the world from €1.2 billion in a year ago month, the Statistical Office of the European Communities said.

In a separate report the Statistical Office reported preliminary estimate for second-quarter employment rose 0.3% in the euro area and 0.2% in wider region of EU28 compared to previous quarter.

In the first-quarter seasonally adjusted employment increased 0.2% in euro area and 0.3% in wider region of EU28.

Kingfisher Plc slumped 2.7% to 350.30 pence after the U.K.-based home improvement products retailer reported sales in the first-half ending on August 1 declined 4.9% from a year ago to £5.38 billion from £5.61 billion.

Profit in the period surged 9.7% from a year ago to £38 million compared to £290 million and diluted earnings per share increased to 13.6 pence from 12.2 pence.

The retailer said retail profit decreased 2.1% to £410 million from £419 million in a year ago period.

Kingfisher said sales in U.K. and Ireland region jumped 4.6% to 2.53 billion and sales in France plunged 10.4% to 1.98 billion.

Tele Columbus AG declined 4.3% to €11.49 after the Germany-based largest cable network operator agreed to acquire rival pepcom GmbH for €608 million or $689 million, including debt.

Asian Markets

The Bank of Japan left its stimulus program on hold after a 2-day meeting and retained the rate of money printing as announced before.

The Nikkei average closed higher after the Bank of Japan left its stimulus policy intact.

The Nikkei 225 Stock Average gained 60.78 or 0.3% to 18,026.48 and the broader Topix index slid 0.17 to 1,462.24.

The yen strengthened to 119.56 against a dollar.

Food companies rose on a news report that the second-largest meat processor, Itoham Foods is in merger talks with the seventh-largest Yonekyu.

The report was first published by the Nikkei business daily.

LIXIL Group Corporation closed unchanged at 2,634 yen after the sanitary equipment provider forecasted set the new mid-term strategy and forecasted to achieve total sales of 2 trillion yen by fiscal year ending March 2018 and net income of about 100 billion yen.

Sales in water technology business for the fiscal 2018 estimated to 703 billion yen and sales in housing technology segment to achieve 591 billion yen.

The company forecasted sales in building technology business of about 374 billion yen and sales in kitchen technology business expected to reach 123 billion yen.

Market indexes in Mumbai declined and investors overlooked the latest decline in consumer price index. The Reserve Bank of India lifted foreign investment limit to 40% in the largest auto maker Maruti Suzuki India.

Stocks on Dalal Street edged lower in choppy trading following the weak market trend in Asia and investors overlooked the retail inflation data released after yesterday’s market close.

Consumer price inflation declined to 3.66% in August and wholesale inflation decline deepened to a loss of 4.95%. Wholesale prices have been on the decline for the most of the year and the price declines are finally passing to retail level.

Developed markets are looking ahead to the U.S. rate decision after a two-day policy meeting ending on Thursday.

Market in Mumbai are likely to bounce around but corporations are likely to benefit from the lower fuel prices and falling wholesale inflation.

Rupee weakened 5 paisa to 66.37 against one U.S. dollar.

The Sensex Index slipped 150.77 or 0.6% to close at 25,705.93. The CNX Nifty decreased 43.15 or 0.6% to 7,829.10.