- The Dow Jones Industrial Average rose nearly 200 points Friday.
- U.S. retail sales rose faster than expected in September, signaling that the consumer-led recovery was still on track.
- Consumer spending could face resistance in the fourth quarter due to weakness in the labor market and delays in new fiscal stimulus.
The Dow and broader U.S. stock market rallied on Friday after stronger than expected retail sales data suggested the economic recovery was still on track.
Dow Jones, S&P 500, Nasdaq Rally
All of Wall Street’s major indexes traded higher Friday, mirroring a strong pre-market for U.S. stock futures. The Dow Jones Industrial Average rose by as much as 193 points.
A measure of implied volatility known as the CBOE VIX traded flat on Friday after recording four consecutive gains. The so-called “investor fear index” is currently hovering just below 27 on a scale of 1-100, where 20 represents the historic average.
U.S. Retail Sales Rise Faster Than Expected
Retail sales rose in September at the fastest clip in three months, capping off a strong third quarter and raising optimism that the consumer-led recovery was still on track.
Receipts at retail stores rose 1.9% in September, the Department of Commerce reported Friday. Analysts in a median forecast were calling for a 0.7% increase.
Most major retail businesses reported gains last month, with clothing stores registering an 11% increase in sales. Watch the video below for more analysis:
Jane Foley, head of foreign-exchange strategy at Rabobank, told The Wall Street Journal that the latest figures “could be the last hurrah” as Americans contend with a resurgence of Covid cases and a lack of stimulus relief from Congress.
A second wave of Covid-19 infections threatens to undermine the tepid labor market recovery. Initial jobless claims rose unexpectedly last week and have remained above 800,000 for seven consecutive weeks.
Meanwhile, Republicans and Democrats have failed to make new progress on a stimulus deal even after President Trump offered a $1.8 trillion relief package. Senate Majority Leader Mitch McConnell is planning to push for a new vote next week.
In other data, the Federal Reserve reported a 0.6% decline in industrial production in September. Losses were concentrated at manufacturing and utility companies.