US stocks surge after upbeat retail sales data

Traders work the floor of the New York Stock Exchange at the end of the trading day on Jan 13, 2014 in New York City. US stocks closed solidly higher on Tuesday, buoyed by a better-than-expected report on December retail sales covering the holiday sh
Traders work the floor of the New York Stock Exchange at the end of the trading day on Jan 13, 2014 in New York City. US stocks closed solidly higher on Tuesday, buoyed by a better-than-expected report on December retail sales covering the holiday shopping season. -- PHOTO: AFP

NEW YORK (AFP) - US stocks closed solidly higher on Tuesday, buoyed by a better-than-expected report on December retail sales covering the holiday shopping season.

The Dow Jones Industrial Average climbed 115.92 points (0.71 per cent) to 16,373.86.

The broad-market S&P 500 advanced 19.68 (1.08 per cent) to 1,838.88 and the tech-rich Nasdaq rose 69.71 (1.69 per cent) to 4,183.02.

"The stock gods decided to buy the dip on Tuesday, a day after the biggest sell-off in about three months," said Mr Jon Ogg at 24/7 Wall St.

The indices recovered from Monday's dive as investors digested an encouraging report on US retail sales, a part of the consumer spending that drives the economy.

The Commerce Department said retail sales rose 0.2 per cent in December, surprising analysts who had estimated no change.

"Overall, the December retail sales figures come as somewhat of a relief after Friday's dismal employment report appeared to be a slight cause for concern following a series of positive economic data," said Mr Michael Soni of BBVA Research.

JPMorgan Chase and Wells Fargo kicked off the banking sector's fourth-quarter earnings season with modestly better-than-expected results.

Dow member JPMorgan inched up 0.1 per cent. The nation's largest bank posted a 7.2 per cent drop in fourth-quarter earnings, while adjusted US$1.40 (S$1.77) earnings per share beat expectations by five cents.

Wells Fargo also added 0.1 per cent after posting a 10.4 per cent profit rise for the fourth quarter, with earnings of US$1.00 per share two cents above estimates.

Technology shares rallied. Microsoft led the Dow higher, advancing 2.3 per cent. Intel surged nearly 4.0 per cent after a JPMorgan upgrade. Tech heavyweight Apple jumped almost 2.0 per cent.

Time Warner Cable gained 2.7 per cent after rejecting a third takeover proposal from Charter Communications as "grossly inadequate." Charter rose 2.3 per cent.

Google gained 2.4 per cent after announcing it was buying Nest Labs, a smart-home company that makes thermostats and smoke alarms, for US$3.2 billion in cash.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.87 per cent from 2.83 per cent Monday, while the 30-year increased to 3.80 per cent from 3.77 per cent. Bond prices and yields move inversely.

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