1:00PM NY, 5:00 PM Frankfurt European markets gained ground, boosted by strong mining stocks.
European stock markets recovered from earlier weakness to close higher on Wednesday, boosted by strong opening on Wall Street and solid gains in the mining sector. U.S. markets rebounded after better-than-expected retail sales in May boosted optimism about the national economy and corporate profits. Among mining stocks, shares in Lonmin climbed 4.8%, Vedanta Resources rose 3.5% and Rio Tinto gained 4.5%.
Among other notable gainers, mortgage lender Alliance & Leicester rose 1.3% after it said its core operating profit for 2007 will come at the top end of analyst forecast range. Shares in Spanish clothing chain Inditex rose 1.5% after reporting a better-than-forecast Q1 profit.Also in the retail sector, shares of luxury fashion group Burberry rose 2.1% after it was upgraded to buy from neutral at Merrill Lynch. Shares in supermarket group J. Sainsbury rose 1.5% on speculation of stake buying.
The U.K. FTSE 100 advanced 0.6% at 6559.60, the French CAC-40 rose 0.6% at 5934.27, while the German DAX Xetra 30 finished virtually unchanged at 7680.76 as insurer Allianz and real estate company Hypo Real Estate weighed on the index, losing more than 1%.
11:30AM U.S. market averages traded higher on optimism about corporate profits.
U.S. market averages continued to post gains, as easing rate concerns helped generate positive sentiment. Retreating bond yields fueled a rebound in rate-sensitive shares including banks, utilities and home builders. Among utilities, shares of Edison International (
EIX: chart) added 1%, while FirstEnergy (
FE: chart) gained 0.6%. Shares of chip makers reversed from yesterday''s losses, with Qualcomm (
QCOM: chart) leading advances on the Nasdaq with a 1.8%.
Shares of consumer-oriented issues big manufacturers also advanced after robust retail sales boosted optimism about the national economy and corporate profits. Altria Group (
MO: chart) added nearly 1%. Boeing (
BA: chart) was a leading gainer on the Dow, rising 1.7%. Caterpillar (
CAT: chart) added 0.4% after it increased its quarterly cash dividend 20% to 36 cents from 30 cents a share. Shares of Exxon Mobil (
XOM: chart) gained 0.4% as oil prices rose following data that showed a surprise drop in refinery utilization rates.
The Dow Jones industrial average was up 63.78 points, or 0.48%, at 13,358.79. The Standard & Poor''s 500 Index was up 8.17 points, or 0.55%, at 1,501.17. The Nasdaq Composite Index was up 11.14 points, or 0.44%, at 2,560.91. The yield on the benchmark 10-year Treasury note retreated to 5.23% after selling sent it to a five-year high above 5.33% in European trade.
9:45AM U.S. stocks opened higher, boosted by strong retail sale. Bond yields retreated.
U.S. stocks recovered from earlier weakness to open higher on Wednesday. Market sentiment improved on optimism about profit growth after strong retail sales in May indicated strength in consumer spending.
The Commerce Department said that retail sales jumped 1.4% in May, the largest gain in over 16 months, beating expectations of a 0.7% increase. The dollar rallied, reaching a four-month high vs. the yen and an 11-week high against the euro after the retail sales data. In addition, bond yields retreated from five-year highs.
The blue-chip average was supported by gains in the shares of Alcoa (
AA: chart), up 1.8% and Boeing (
BA: chart), up 1.2%. However, Dow component Walt Disney (
DIS: chart) lost 0.7%after completing the sale of its ABC Radio unit to Citadel (
CDL: chart) for $1.35 billion.
On the deal news front, Goldman Sachs (
GS: chart) and Blackstone Group revealed that they are offering $11.4 billion for Biomet (
BMET: chart). The Dow Jones industrial average was up 55.82 points, or 0.42%, at 13,350.83. The Standard & Poor''s 500 Index was up 6.23 points, or 0.42%, at 1,499.23. The Nasdaq Composite Index was up 9.32 points, or 0.37%, at 2,559.09.
Retail sales jumped 1.4% in May.
Wednesday morning, the Department of Commerce released its report on retail sales in the month of May, showing that sales rose much more than economists had expected following a modest decrease in the previous month. The report showed that
retail sales surged up 1.4 percent in May following a revised 0.1 percent decrease in the previous month. Economists had expected sales to edge up 0.6 percent compared to the 0.2 percent decrease originally reported for April. The stronger than expected sales growth was partly due to a notable increase in sales by gas stations, which surged up 3.8 percent in May after rising 1.8 percent in April. An increase in gasoline prices contributed to the strong growth in sales by gas stations.
Strong sales growth by clothing and clothing accessories stores and building material and garden equipment dealers also contributed to the rebound in sales. The report also showed that sales by motor vehicle and parts dealers rebounded by 1.8 percent in May following a 0.5 percent decrease in April. Excluding sales by motor vehicle and parts dealers, retail sales rose 1.3 percent in May after a revised 0.1 percent increase in April.
Economists had expected ex-auto sales to rise 0.7 percent compared to the lack of growth originally reported for the previous month. The strong retail sales growth is an indication that consumers continue to spend money in spite of high energy prices. While this is a good sign for the economy, it may add to recent concerns about the outlook for interest rates.
