Upbeat Data, Earnings Give Market Leg Up…..

A host of solid economic data and earnings from a pair of large retailers helped to lift U.S. equities higher in today’s session. Retail sales jumped and business inventories increased slightly more than expected, while the NAHB Housing Market Index surprised to the upside, and the Fed’s industrial production and capacity utilization report showed both were higher than expected. However, import prices were above estimates, adding to the ongoing inflation concerns. Meanwhile, Dow members Home Depot and Walmart both beat expectations on the top and bottom line, as well as posted strong same store sales. News out of Washington was also in focus as President Biden signed the bipartisan infrastructure bill into law, and he met with Chinese President Xi Jinping overnight. Treasuries were mixed, and the U.S. dollar gained ground, while crude oil prices finished slightly lower in choppy trading, and gold declined. Europe finished mixed on the heels of the slew of data on both sides of the pond, while markets in Asia also diverged.

The Dow Jones Industrial Average rose 55 points (0.2%) to 36,142, the S&P 500 Index gained 18 points (0.4%) to 4,701, and the Nasdaq Composite advanced 120 points (0.8%) to 15,974. In moderate volume, 3.8 billion shares of NYSE-listed stocks were traded, and 5.3 billion shares changed hands on the Nasdaq. WTI crude oil inched $0.12 lower to $80.76 per barrel. Elsewhere, the gold spot price declined $15.10 to $1,851.50 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.5% higher at 95.92.

Advance retail sales for October rose by 1.7% month-over-month (m/m), versus the Bloomberg consensus forecast of a 1.4% increase, and compared to September’s upwardly-adjusted 0.8% rise. Last month’s sales ex-autos gained 1.7% m/m, compared to expectations of a 1.0% gain and as September’s figure was revised lower to a 0.7% increase. Sales ex-autos and gas were up 1.4% m/m, versus estimates of a 0.7% rise, while September’s reading was adjusted downward to a 0.5% gain. The control group, a figure used to calculate GDP, advanced 1.6% m/m, versus projections of a 0.9% increase, and following September’s downwardly-revised 0.5% rise.

The Import Price Index rose 1.2% m/m for October, versus estimates of a 1.0% gain, and compared to September’s unrevised 0.4% increase. Versus last year, prices were up by 10.7%, compared to forecasts of a 10.3% increase and August’s upwardly-revised 9.3% gain.

The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment in October unexpectedly improved to 83 from September’s 80 level, and compared to estimates of the index remaining flat. The index rose for the third consecutive month as the NAHB said, “In addition to well publicized concerns over building materials and the national supply chain, labor and building lot access are key constraints for housing supply. Lot availability is at multi-decade lows and the construction industry currently has more than 330,000 open positions.”

Business inventories rose 0.7% m/m in September, just above forecasts of a 0.6% rise and just below August’s upwardly-revised 0.8% increase. Business inventories have increased for fourteen straight months.

The Federal Reserve’s report on industrial production showed a 1.6% m/m increase in October, versus estimates of a 0.9% increase, and compared to September’s unrevised 0.7% decline. Capacity utilization increased to 76.4%, versus forecasts to rise modestly to 75.9% from the prior month’s unrevised 75.2% rate.

Treasuries were mixed, as the yield on the 2-year note lost 2 basis points (bps) to 0.51%, while the yields on the 10-year note and the 30-year bond rose 1 bp to 1.63% and 2.02%, respectively.

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