Wall St climbs as US consumer spends big

Specialist Jason Hardzewicz, left, and trader Michael Zicchinolfi work on the floor of the New York Stock Exchange. File photo / AP

Wall Street climbed overnight, while US Treasuries fell, as the all-mighty American consumer showed she is confident enough in the outlook to spend more money than anticipated, bolstering expectations the world's biggest economy is gathering steam.

US retail sales excluding automobiles, petrol, building materials and food services, climbed 0.7 per cent in December, following a 0.2 per cent advance in November, according to Commerce Department data.

The better-than-expected retail sales data, which came hot on the heels of the surprisingly disappointing government non-farm payrolls December data, released last Friday, restored confidence in the acceleration of the US economic recovery.

"The retail sales are painting a better economic backdrop than payrolls did, and investors are using recent weakness as an opportunity to buy," Mike Gibbs, co-head of the equity advisory group at Raymond James in Memphis, Tennessee, told Reuters.

In afternoon trading in New York today, the Dow Jones Industrial Average added 0.53 per cent, the Standard & Poor's 500 Index advanced 0.86 per cent, while the Nasdaq Composite Index jumped 1.4 per cent. Gains in shares of Intel, last up 3.4 per cent, and those of Microsoft, last up 2.2 per cent, propelled the Dow higher.

US Treasuries, however, fell, pushing yields on 10-year bonds three basis points higher to 2.86 per cent.

"Another strong data point adds additional credence to the idea the monthly jobs report was an aberration," Dan Greenhaus, chief global strategist in New York at BTIG, told Bloomberg News. "While one number shouldn't move the discussion in either direction, a strong retail sales report is much better than a weak one."

The Fed last month decided to reduce its monthly bond-buying program to US$75 billion this month, from US$85 billion previously. And further easing is ahead, if Fed Bank of Philadelphia President Charles Plosser has his way.

"Chairman Ben Bernanke indicated in his December press conference that if we are making progress in terms of inflation and continued job gains, then the program would be concluded late in 2014," Plosser said in a speech in Philadelphia today.

"The December employment report has not changed my belief that the economy has already met the criteria of substantial improvement in labour market conditions," Plosser said. "So my preference would be that we conclude the purchases sooner than this."

Plosser also said that "the economy is on firmer footing than it has been for the past several years."

Shares of JPMorgan eked out a 0.2 per cent gain after the company reported a 7.3 per cent slide in fourth-quarter profit following legal settlement costs. In the past year, the bank has agreed to pay about US$20 billion to settle numerous investigations into its businesses.

Shares of Wells Fargo added 0.3 per cent after its quarterly results, while better than expected, also failed to inspire.

In Europe, the Stoxx 600 Index finished the session with a 0.2 per cent gain from the previous close. The UK's FTSE 100 rose 0.1 per cent, while France's CAC 40 and Germany's DAX both increased 0.3 per cent.