Stocks opened higher and continued their climb in the first hour of trading, as retail sales came in slightly better than expected and a weekly labor report said claims for unemployment benefits were moderating.
As of 10:30, the S&P 500 was up 0.90% to 947, the Dow was up 0.91% to 8819, and the Nasdaq was up 0.88% to 1869. The 10-year bond continues to moderate; the yield is down two tenths to 3.93%, after hitting 4.00% yesterday for the first time in a year.
The U.S. Census Bureau said Retail Sales improved a bit more than expectations in May, recording a 0.5% monthly gain, compared with the market forecast of +0.4%.. Since May 2008, retail sales have fallen 9.6%.
Some analysts said the details were less optimistic than the headline, which was lifted in part from rising gas prices.
“The trend seems to be more or less flat, which is better than a decline but is hardly a green shoot,” said Ian Shepherdson from High Frequency Economics. “Consumers are now under pressure from rising gas prices; expect no near-term improvement in core sales.”
DeutscheBank’s Joseph LaVorgna added, “The weakness in the discretionary categories adds some doubt to the extent that consumer spending is recovering meaningfully.”
Revisions for April were something to be positive about though. The monthly decline in April was revised up from -0.5% to -0.2%; excluding autos, it was revised from -0.5% to -0.2%.
Released at the same time, the Jobless Claims survey was a mixed bag. Initial Claims came in 24k lower than the prior week with 601k claims and the 4-week average fell 10k to just under 622k.
However, Continuing Claims ― a measure of how many people continue to receive unemployment benefits ― resumed its upward trek in the final week of May. Continuing claims came moved up 59k to 6.816 million in the week, after reporting its first fall in four months in the week before.
Ian Pollick from TD Securities said the pace of job destruction appears to be slowing, but with job creation at a standstill the labor market will continue bleeding even once broader recovery begins.
At 10am, the Census Bureau said Business Inventories were cut back more than expected in April. Overhang was reduced by 1.1% in the month, more than the -0.8% forecast from economists. Over the past 12 months, inventories have been slashed by 6.6%.
This afternoon at 1:15, Atlanta Fed President Dennis Lockhart will speak on the economy before the National Association of Securities Professionals. A Q&A will follow.