U.S. Stocks Rise After Upbeat Retail Sales Data
08/14/2012| 11:04am US/Eastern
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--Stocks rise after better-than-expected July retail sales
--Home Depot leads the DJIA after quarterly results top expectations
--Small-business optimism slips; business inventory data still on tap
By Chris Dieterich
NEW YORK--Home Depot led blue chips higher after the retailer's quarterly earnings topped expectations, results that were echoed in a report showing retail sales in July rose for the first time in four months.
The Dow Jones Industrial Average rose 19 points, or 0.1%, to 13188 in morning trading, while the Standard & Poor's 500-stock index tacked on two points, or 0.2%, to 1406. The Nasdaq Composite Index advanced three points, or 0.1%, to 3025.
Financial and consumer-discretionary stocks were at the front of the pack. Shares of Home Depot advanced 3.3% after the home-improvement retailer also raised its full-year outlook in that earnings report. Bank of America rose 1.8%, while J.P. Morgan Chase added 1.4%.
In economic news, the Commerce Department report showed that retail sales rose in July for the first time in four months. July's gain well outpaced expectations and was the biggest jump since February.
Tuesday's rise pulled the S&P 500 into positive territory on the week, rebounding after the benchmark fell to snap a six-session winning streak Monday.
"I thought we'd see something of a pullback today after last week was so strongly and consistently up, but the retail sales numbers are providing a bit of a relief after recent reports certainly have been dreadful," said Michael Farr, president at Farr, Miller & Washington.
Separately, the producer-price index, a measure of how much wholesalers and manufacturers pay for finished goods, rose for second month in a row, though the modest gain shows inflation that is likely under control.
Business inventories rose slightly in June, matching expectations, a signal that companies aren't yet willing to store extra goods.
The National Federation of Independent Business's small-business optimism index slipped in July from the prior month, as worries about earnings and future business activity offset rising sentiment about new-job creation.
European markets were broadly higher, with the Stoxx Europe 600 up 0.5%, after better-than-expected growth readings from the Continent's two largest economies. German gross domestic product increased 0.3% in the second quarter, beating expectations. In France, GDP was flat compared with the first quarter but topped forecasts for a slight contraction.
Still, euro-zone economic output fell 0.2% in the second quarter, and the German ZEW economic expectations index fell to its lowest reading of the year in July, missing expectations.
Asian markets rose, with Japan's Nikkei Stock Average gaining 0.5% and China's Shanghai Composite adding 0.3%.
Crude-oil futures edged up 0.6% to $93.26 a barrel, while gold futures fell 0.65 to $1,602 a troy ounce. The dollar was roughly flat against the euro but edged up against the yen. The yield on the 10-year Treasury rose to 1.712%.
Groupon tumbled 23% after the online coupon company reported its first-ever quarterly profit, and gains in the second quarter were driven by Groupon Goods, a relatively new, low-margin business of selling merchandise such as jewelry or kitchen appliances, rather than its primary daily-deals business.
Michael Kors climbed 13% after the luxury accessories maker reported better-than-expected fiscal first-quarter results and provided second-quarter and full-year outlooks that were above current projections.
Dick's Sporting Goods fell 2.6% after earnings in the second-quarter declined 27% on a charge tied to its investment in JJB Sports, though the company raised its full-year adjusted earnings estimate.
Saks climbed 5.2% after posting a widening quarterly loss as the upscale department-store chain faced a challenging economic environment and a series of costs, including those associated with store closures.
TJX nudged 0.4% higher. Quarterly earnings rose 21% as the off-price seller of brand-name goods saw its same-store sales growth strengthen.
Envivio plunged 54% after the company sharply lowered its fiscal second-quarter revenue outlook citing a slowdown in spending by its North American and Western European service provider customers.
Write to Chris Dieterich at christopher.dieterich@dowjones.com
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