Dow up 49 points
Good news, from better-than-expected retail sales and worker productivity figures to a major court victory for Merck & Co, drove US stocks higher today, although a leap in oil prices limited the gains.
Wall Street’s inflation worries were eased by the latest government report on productivity, which rose 4.1% in the third quarter, the biggest rise in a year. With workers more productive, they can be paid more without increasing the risk of inflation.
And while investors remain cautious about consumer spending this winter due to high heating prices, October’s retail sales reports were generally stronger than expected, with Wal-Mart, Costco and Nordstrom all surpassing expectations.
Stock buyers received further encouragement by a report showing growth in the service sector. The Institute for Supply Management’s services index rose to 60 in October from 53.3 in September and three points better than economists had forecast.
Yet the market received a harsh reminder of the long-term problems the US economy faces as oil prices surged 2.03 dollars to settle at 61.78 dollars per barrel on the New York Mercantile Exchange. The jump in oil ate into some of the market’s gains and brought to mind the high energy prices, inflation and expected drop in fourth quarter consumer spending that lie in the future.
“That’s a lot of good news that’s driving the market today,” said Hugh Johnson, chief investment officer at Johnson Illington Advisers. “But it begs the question, who knows what the market will tell us tomorrow? It’s been an on-again, off-again market.Today it’s on-again.”
The Dow Jones industrial average rose 49.86, or 0.48%, to 10,522.59.
Broader stock indicators also moved higher. The Standard & Poor’s 500 index added 5.18, or 0.43%, to close at 1,219.94, and the Nasdaq composite index climbed 15.91, or 0.74%, to 2,160.22.
