Energy, retail shares lead US stocks higher

Pedestrians walking past an American Eagle Outfitters store in New York in 2009.
Pedestrians walking past an American Eagle Outfitters store in New York in 2009.PHOTO: REUTERS

NEW YORK (AFP) - Wall Street stocks rose for the second straight session Tuesday, led by resurgent oil shares and retailers after a pair of US clothing chains raised their earnings forecasts.

Dow members ExxonMobil rose 1.8 per cent and Chevron 3.4 per cent, extending Monday's gains as investors continued to pile into the beaten-down sector.

Retail stocks jumped after Victoria's Secret parent company L Brands and teen retailer American Eagle Outfitters lifted their earnings forecasts, with the latter saying it was able to charge full prices and resort less frequently to promotions.

L Brands rose 3 per cent, while American Eagle gained 7.9 per cent. Among other retailers, Dow member Wal-Mart Stores added 0.9 per cent, Target 1.3 per cent and Best Buy 0.9 per cent.

"Just about anything tied to the consumer is having an above-average day today," said Michael James, managing director of equity trading at Wedbush Securities.

The Dow Jones Industrial Average ended up 89.39 points (0.50 per cent) at 17,918.15.

The broad-based S&P 500 rose 5.74 (0.27 per cent) to 2,109.79, while the tech-rich Nasdaq Composite Index advanced 17.98 (0.39 per cent) to 5,145.13.

Insurer American International Group (AIG) fell 4.4 per cent as it rejected activist investor Carl Icahn's idea to split into three parts. AIG though reported a third-quarter loss of US$231 million (S$323 million).

King Digital Entertainment, the creator of the "Candy Crush" game, jumped 14.9 per cent on news it agreed to be acquired by Activision Blizzard for US$5.9 billion. Activision fell 3.6 per cent.

General Motors rose 0.6 per cent and Ford gained 0.4 per cent after both automakers reported their best US October sales in 11 years.

Car rental company Avis Budget plunged 11.4 per cent as it projected full-year profit of US$3.10-US$3.25 per share, down from the August forecast for US$3.15-US$3.45. The company expects a negative hit from foreign exchange fluctuations of 20 cents per share.

Fitbit, maker of wireless fitness trackers, fell 8.6 per cent despite projecting better-than-expected profits. Analysts pointed to concerns about high valuation and to a plan to sell some 24 million additional shares, including from a follow-on equity offering after the recent IPO.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.21 per cent from 2.18 per cent Monday, while the 30-year advanced to 3 per cent from 2.95 per cent. Bond prices and yields move inversely.