Stocks moved sharply higher at the start of trading on Friday, as traders reacted positively to upbeat retail sales data. The major averages all showed strong moves to the upside after ending the previous session on opposite sides of the unchanged line.
In the past few minutes, the major averages have pulled back off their highs for the young session but remain firmly positive. The Dow is up 116.40 points or 1 percent at 11,594.53, the Nasdaq is up 35.71 points or 1.4 percent at 2,655.95 and the S&P 500 is up 15.95 points or 1.3 percent at 1,219.61.
The initial strength on Wall Street was largely due to the release of a report from the Commerce Department showing stronger than expected retail sales growth in the month of September, with the data easing recent concerns about the economy.
The report showed that retail sales surged up by 1.1 percent in September following an upwardly revised 0.3 percent increase in August. Economists had expected sales to increase by about 0.8 percent.
Excluding a 3.6 percent jump in auto sales, retail sales still rose by 0.6 percent in September, exceeding economist estimates for a 0.4 percent increase.
Peter Boockvar, equity strategist at Miller Tabak, said, “With all the hand wringing over a tough labor market and major market turbulence in August and September, retail sales in the important back to school season have held up surprisingly well.”
The upward momentum for the markets also comes on the heels of better than expected quarterly results from internet search giant Google (GOOG), which reported third quarter adjusted earnings of $9.72 per share, well above the $8.74 per share expected by analysts. .
Google said its revenues, excluding traffic acquisition costs, came in at $7.51 billion, higher than the year-ago quarter’s $5.48 billion and the consensus estimate of $7.2 billion.
Meanwhile, traders have largely shrugged off news that Standard & Poor’s downgraded Spain’s credit rating by one notch to AA- from AA.
Networking stocks have shown a strong move to the upside in early trading, driving the NYSE Arca Networking Index up by 2.5 percent. With the gain, the index has risen to its best intraday level in almost a month.
Trucking, steel, and oil service stocks are also seeing considerable strength, with oil service stocks moving higher along with the price of crude oil. Most of the other major sectors have also moved to the upside amid broad based buying interest.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday after seeing recent strength. Japan’s Nikkei 225 Index fell by 0.9 percent, while Hong Kong’s Hang Seng Index slid by 1.4 percent.
Meanwhile, the major European markets have all moved to the upside on the day, extending a recent upward move. While the U.K.’s FTSE 100 Index is up by 1.5 percent, the German DAX Index and the French CAC 40 Index are up by 1.7 percent and 1.9 percent, respectively.
In the bond market, treasuries are under pressure following the release of the better than expected retail sales data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 8.1 basis points at 2.25 percent.