By Corrie Driebusch
U.S. stocks rallied on Thursday after data showed that retail sales posted the biggest jump in eight months in November.
The Dow Jones Industrial Average climbed 213 points, or 1.2%, to 17746. The S&P 500 added 27 points, or 1.3%, to 2053 and the Nasdaq Composite rose 70 points, or 1.5%, to 4755.
Stocks were buoyed by data showing Americans increased their shopping last month. U.S. retail sales rose a seasonally adjusted 0.7% in November from a month earlier. Economists surveyed by The Wall Street Journal had predicted overall sales to rise 0.4%.
Thursday's rally marked a reversal from the previous session's selloff that saw the Dow industrials post their biggest one-day loss in two months, as oil prices tumbled to fresh five-year lows. The decline in oil prices is leaving consumers with more discretionary income, providing another boost for the U.S. economy which has already seen robust job growth this year. At the same time, falling crude prices will cut into the revenues of energy companies, particularly those that have made big bets on U.S. shale oil.
Consumer discretionary shares rallied on the positive retail sales data, with the sector up 1.4%.
"In essence a decline in prices at the pump represents an increase in consumers' discretionary take-home pay, and it shouldn't be surprising that you should start seeing stronger retail sales," said Burns McKinney, portfolio manager at NFJ Investment Group, which manages about $41 billion.
"Where you should see it the most is Wal-Mart or Costco where sales are competing for the incremental or marginal dollar to a greater degree than some of the luxury retailers."
Shares of Wal-Mart Stores Inc. rose 1.6% and those of Costco Wholesale Corp. gained 1.4%.
Thursday's gains come after sharp declines for both the price of oil and U.S. stocks, with the benchmark U.S. oil price down nearly 8% so far this week and the S&P 500 off 2.4% as of Wednesday's close.
On Wednesday, the benchmark U.S. oil price tumbled 4.5% to $60.94 a barrel, with investors blaming the downturn on an unexpected jump in domestic oil stockpiles. The sharp decline in the price of oil weighed on shares of U.S. energy producers, and energy was the worst performing sector in the S&P 500. The price of crude is down 38% year-to-date.
On Thursday, U.S. oil futures were little changed at $60.93 a barrel on the New York Mercantile Exchange.
"Oil doesn't seem to be falling that much today, and that's helping energy stocks," said Jason Weisberg, managing director at Seaport Securities Corp.
Shares of energy companies in the S&P 500 were up 2.4%. Energy is the best performing sector in the Dow industrials, with Exxon Mobil Corp. trading up 3.1%. Exxon shares are still off nearly 10% year-to-date.
European stocks were unchanged, with the Stoxx Europe 600 up 0.04%.
The yield on the 10-year Treasury note rose to 2.196% from 2.169% on Wednesday. Yields rise as prices fall.
In corporate news, shares of Staples Inc. jumped 8.6% after Starboard Value LP disclosed in filings that it has built a roughly 6% stake in the company. The activist investor also boosted its position in Office Depot Inc. to about 10%. Shares of Office Depot rose 10%.
Men's Wearhouse said its third-quarter profit fell 82% on expenses related to its acquisition of rival Jos. A. Bank Clothiers Inc. The Houston company's stock declined 3%.
RadioShack Corp. on Thursday outlined a $400 million cost-cutting plan it hopes will stanch a hemorrhage of cash, as the struggling electronics chain tries to get through the holiday season in good enough shape to trigger a rescue plan from its lenders. Shares fell 7.3%.
Shares of Lending Club Corp. opened at $24.75 in their trading debut Thursday, well above their initial public offering price of $15, and valuing the company at nearly $9 billion.
Write to Corrie Driebusch at firstname.lastname@example.org
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