U.S. stocks rose early today, rebounding from Tuesday’s decline, as a slowdown in retail sales boosted speculation the Federal Reserve won’t be forced to raise rates sooner than anticipated.
Amazon.com Inc. climbed 3.1 percent after ChannelAdvisor Corp. said the retailer’s same-store sales rose 40 percent in July. FleetCor Technologies Inc. rose 5.3 percent after it agreed to acquire Comdata Inc. for $3.45 billion. King Digital Entertainment Plc plummeted 23 percent trading after posting worse-than-forecast sales and cutting its 2014 outlook. Macy’s Inc. lost 4.3 percent after profit fell short of estimates.
The Standard & Poor’s 500 Index gained 0.7 percent, or 13.64, to 1,947.39 at 11:16 a.m.. The Dow Jones industrial average climbed 101.60 points, or 0.62 percent, to 16,662.14.
“There is some feeling that events overseas are beginning to cool down a little bit but also the retail numbers might suggest that the Fed is not going to be so aggressive in raising rates any time soon,” Bruce Bittles, chief investment strategist at Milwaukee-based RW Baird & Co., which oversees $110 billion, said in a phone interview. “That has been the backbone of the market for the past five years.”
Retail sales were little changed in July, the worst performance in six months, as car demand slowed and tepid wage growth restrained U.S. consumers. The slowdown in purchases followed a 0.2 percent advance in June, the Commerce Department reported today in Washington.
Recent data have shown U.S. gross domestic product expanded at a 4 percent annual pace in the second quarter, confirming the Fed’s view that a first-quarter contraction was transitory. Employers in the U.S. added more than 200,000 jobs for a sixth straight month in July, the longest such period since 1997.
The economic strength had created concern that the Fed may be forced to act on rates sooner than anticipated, as the central bank remains on pace to wind down its monthly bond purchases in October. Fed Chair Janet Yellen has said officials will keep its benchmark low for a “considerable time” after the bond buying ends.
Three-rounds of bond purchases and record-low interest rates have helped push stocks higher by as much as 194 percent from a bear-market low in 2009.
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