US Equities Turn Higher As Retail Sales Lifts Sentiment; China, US Assist Europe

[Chart courtesy of MarketWatch.com]

US equities moved higher Monday after retail sales data for September came in better than expected and Citigroup delivered above consensus quarterly earnings results.

Sentiment was buoyed after a Commerce Department report revealed retail sales rose by a seasonally-adjusted 1.1 percent, beating forecasts of a 0.8 percent rise marginally.

A separate report showed the Federal Reserve Bank of New York’s Empire State Manufacturing Index, though showing a contraction, improved to minus 6.2 in October from minus 10.4 in September, indicating slight improvement in manufacturing activity in the New York region.

The Dow Jones Industrial Average (DJIA) jumped 95 points posting its second straight daily gain. Breadth within the 30-stock blue-chip index turned positive with winners outpacing laggards 25 to 5. Banking and healthcare stocks topped the day’s gainer’s list.

The S&P 500 Index (SPX) added 11 points with healthcare gaining the most and telecommunications lagging among the 10 business groups.

Treasury yields moved up, pushing prices down as positive US retail sales number boosted risk appetite, diminishing the allure of safe havens.

Yield on the benchmark 10-year Treasury rose one basis point to 1.66 percent while 30-year Treasury bond yields rose two basis points to 2.85 percent.

Meanwhile the US dollar managed to eke out a slim gain Monday ahead of a European Summit meet later this week amid speculations on prospects of a Spanish bailout request and extension of deficit-reduction target for Greece.

Across the Atlantic, European shares moved higher as concerns over global consumer demand eased after Chinese exports jumped 9.9 percent in September, beating forecasts of a five percent rise. The pan-European Stoxx Europe 600 index rose 0.5 percent, reclaiming a 0.5 percent loss suffered on Friday.

The Spanish IBEX 35 index climbed 0.3 percent after a Reuters report suggested Spain may request for a bailout in November.

Buoyed by gains in the banking sector, the DAX 30 index rose 0.3 percent in Frankfurt. Index components Commerzbank AG and Deutsche Bank AG added 1.4 percent and one percent respectively.

On a day when equities rallied, natural gas tumbled after the European Union announced ban on import of this fuel from Iran. NG-linked funds plummeted with the Unites States Natural Gas (UNG) crashing 3.24 percent for the day.

As healthcare stocks surged, the State Street Health Care Select Sector SPDR (XLV) added an impressive 1.44 percent on the day. XLV component Eli Lilly reported positive results for late-stage gastric cancer drug ramucirumab, pushing the fund higher.

Today may have been just a dead cat bounce for the S&P 500 as it came off its 50-day moving average. Time will tell if this level continues to be of support or if the next wave of poor earnings will be the assist the bears have been waiting for to pull the indexes lower.

Disclosure: No holdings

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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