Stocks leaped upwards on Wall Street for the second straight day yesterday, with blue-chips gaining over 100 points within minutes of the opening bell on the basis of data showing that US consumers splashed out in April after a tight-fisted March.
Defying worries about growing credit card debt, American shoppers pushed up retail sales by 1.2 per cent, the highest figure for six months.
Analysts had forecast a 0.6 per cent rise in April after a 0.1 per cent increase in March.
The Dow Jones ended up almost 190 points or 1.87 per cent on 10,299.18. The technology laden Nasdaq was 4.04 per cent ahead on 1,719.35, with the broader Standard & Poor's 500 up 2.13 per cent at 1,096.32.
Consumer spending, which drives two-thirds of the US economy, drove up sales of cars, building materials, garden supplies and health care and beauty products, as well as restaurant meals. But higher petrol prices also contributed to the increase.
The figures bode well for corporate profits in the months ahead, encouraging strong buying on Wall Street. Wal-Mart and J.C. Penney both posted quarterly results yesterday exceeding forecasts. Retail company shares rose across the board.
Technology stocks also soared ahead for a second day boosted by brokerage Robertson Stephens raising its price target for Intel. Shares in the chip-maker rose by 2 per cent on the news.
The unexpectedly bullish reading in the April retail numbers was partly because the government figures were adjusted for the early Easter while private-sector data were not.
But one economist said the report was unequivocally strong. "You can make any adjustment you want \ this report was strong," said Mr Joel Naroff, of Naroff Economic Advisors.
Another worried about sustainability. "In my view, consumers have been unbelievable in the way they have continued to spend despite the growth of overall debt burdens ... \ we should realise that the word 'unbelievable' is not a synonym for the word 'sustainable' - which happens to be the real buzzword for monetary policymakers at the moment," said Mr Anthony Chan, of Banc One Investment Advisors.
