By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rose and Treasury prices
fell the most in more than a week as a core reading on retail sales
climbed at its most rapid rate in seven months.
The report boosted thinking that the economy is strong enough to
withstand reduced bond purchases by the Federal Reserve.
Stocks rose further after Dennis Lockhart, president of the
Atlanta Fed Bank, on Tuesday afternoon said the economy's uneven
performance likely means the Fed won't commit to a "full phase-out"
of its $85 billion in monthly bond buys.
Erasing a 77-point slide, the Dow Jones Industrial Average (DJI)
was lately up 39.66 points, or 0.3%, at 15,459.34, with
Hewlett-Packard Co. (HPQ) pacing blue-chip gains after being placed
on Citigroup Inc.'s focus list.
The S&P 500 index (SPX) rose 5.01 points, or 0.3%, to
1,694.48, with technology, industrials and financials the best
performing of its 10 major sectors. Rafferty Capital Markets
analyst Dick Bove told CNBC on Tuesday that the banking sector is
on track for record profits this year.
Shares of US Airways Group Inc. (LCC) declined 11% after the
U.S. Justice Department filed a lawsuit challenging the airline's
merger with AMR Corp. (AAMRQ), the parent of American Airlines.
Apple Inc. (AAPL) jumped 4.4% after investor Carl Icahn touted
his "large position" in the stock and amid reports the
consumer-technology company will unveil a new iPhone on Sept.
10.
J.C. Penney Co. (JCP) retreated 3.4% after activist investor
Bill Ackman resigned from the retailer's board, ending efforts to
oust CEO Mike Ullman.
Yum Brands Inc. (YUM) declined 2.1% a day after the operator of
fast-food chains KFC and Taco Bell said sales in China fell last
month.
Eli Lilly & Co. (LLY) rallied 3% after the drug manufacturer
said its potential treatment for lung cancer yielded positive
initial results in a late-stage study.
The yield on the 10-year Treasury note (10_YEAR) used to
determine rates on loans including mortgages rose 10 basis points
to 2.723%. That hit home builders, with PulteGroup Inc. (PHM) down
2.8%, D.R. Horton Inc. (DHI) off 2.5% and Lennar Corp. (LEN) off
2.9%.
The Nasdaq Composite (RIXF) gained 13.55 points, or 0.4%, to
3,683.56.
For every two shares rising, roughly three fell on the New York
Stock Exchange, where 377 million shares traded as of 2:40 p.m.
Eastern.
Composite volume approached 2.2 billion.
"From an earnings standpoint, we're strong enough to support a
taper in September. And the jobs picture is improving, so I've been
in the camp that it's coming, regardless whether it's September or
December," said Nick Raich, CEO at the Earnings Scout.
A report released by the Commerce Department ahead of the open
showed retail sales rose 0.2% last month after a 0.6% gain in June
that was larger than initially estimated. Retail sales excluding
cars, gasoline and building materials climbed at its fastest pace
in seven months.
"Consumers are still spending, although limited income growth
appears to also be holding spending increases in check," Jim Baird,
chief investment officer at Plante Moran Financial Advisors, wrote
in emailed research.
The dollar(DXY) gained against the currencies of major U.S.
trading partners, including the yen (USDJPY) and the euro
(EURUSD).
Halting a four-session rise, the price of gold futures(GCZ3)
fell $13.70, or 1%, to end at $1,320.50 an ounce. Crude oil for
September delivery (CLU3) climbed 72 cents, or 0.7%, to $106.83 a
barrel.
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