Stocks rise on Wall Street as retail sales remain healthy

Stocks rose on Wall Street Tuesday as investors reviewed solid earnings reports from key retailers and an encouraging update on consumer spending.

The S&P 500 rose 0.5% as of noon Eastern. The Dow Jones Industrial Average rose 184 points, or 0.5%, to 36,270 and the Nasdaq rose 0.6%.

A wide range of companies that rely on consumer spending led the gains. Home Depot rose 5.9% after the home improvement retailer reported surging sales and solid profits in the third quarter amid a hot housing market. The results also lifted competitor Lowe’s by 3.2%.

Technology and health care companies also rose. Communications companies lagged the market.

Bond yields held steady. The yield on the 10-year Treasury remained at 1.62% from late Monday.

A government report showed that Americans largely shrugged off higher prices last month and stepped up their spending at retail stores and online. The Commerce Department said retail sales rose 1.7% in October. That’s the biggest gain since March and up from 0.8% in the previous month.

“It reiterates the strength of the U.S. consumer, but you have to wonder a bit as inflation expectations rise, are people rushing to get in front of that,” said Mike Stritch, chief investment officer at BMO Wealth Management.

Several companies that depend on consumer spending rose. Online crafts marketplace Etsy rose 5.9%. Nike rose 2.5% while Coach and Kate Spade parent Tapestry gained 1.9%.

The nation’s largest retailer, Walmart, also reported solid financial results while raising its profit forecast, but the stock gave back some of the big gains it’s made in the last few weeks.

Investors received another encouraging economic update from the Federal Reserve, which said industrial production rebounded in October with a 1.6% gain. The gain followed a 1.3% plunge in September.

Wall Street is closely monitoring the latest economic reports for more clues as to how businesses and consumers are dealing with rising inflation. Companies have been raising prices as they face higher raw materials costs and supply chain problems. Consumers have been willing to pay the higher prices on many goods, though analysts are concerned that consumers could eventually pull back on spending because of inflation.

“That inflation story is going to be big for the next six months and we’re going to have a lot of stops and starts on that as it evolves,” Stritch said.

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