U.S. stocks gained, trimming a third straight weekly decline for the Standard & Poor’s 500 Index, as the biggest increase in retail sales in four months tempered concern the economy is slowing.
Bed Bath & Beyond Inc. rose 1.5 percent, pacing gains in retailers, as the Commerce Department reported a 0.5 percent increase in retail sales. Nvidia Corp. (NVDA) added 1.8 percent after the maker of graphics chips forecast higher sales than analysts estimated as it gains market share from Advanced Micro Devices Inc. Hewlett-Packard Co. (HPQ) advanced 3.2 percent after Jefferies Group Inc. raised its recommendation for the shares.
The S&P 500 added 0.4 percent to 1,177.13 at 10:47 a.m. in New York. The benchmark gauge for American equities jumped 4.6 percent yesterday, and has trimmed this week’s decline to 1.9 percent. The Dow Jones Industrial Average increased 72.13 points, or 0.7 percent, to 11,215.44 today.
“That’s a very positive sign on retail sales,” Darrell Cronk, the New York-based chief investment officer at Wells Fargo Private Bank, which oversees $210 billion. “Growth is slowing, but we cannot see it heading into a recession. Corporate earnings have been excellent, valuations are cheap.”
The S&P 500 was down 14 percent from a three-year high at the end of April as of yesterday, after plunging as much as 18 percent through Aug. 8. About $2.3 trillion was erased from U.S. equity values in the last three weeks as Europe’s debt crisis, signs the economy is slowing and S&P’s downgrade of the government’s AAA credit rating left the benchmark gauge for U.S. shares within 11 points of a bear market.
Bear Market
Both European shares and the Russell 2000 Index of small U.S. companies entered a bear market this week, falling at least 20 percent from their previous highs.
Stock futures extended gains before the open of regular trading as retail sales figures matched the median forecast of 81 economists surveyed by Bloomberg News and followed a 0.3 percent increase in June that was larger than previously estimated. Excluding auto sales, purchases rose more than projected.
Bed Bath & Beyond gained 1.5 percent to $53.79.
“The retail sales report was good,” Barry Knapp, the New York-based head of U.S. equity strategy at Barclays Plc, said in a telephone interview. “The first step is a stabilization of the macro outlook in the U.S. Once you remove the uncertainties, it allows for capital market stabilization. Stocks are exceptionally cheap and this is a buying opportunity.”
Global Stocks
Global stocks rose, extending the Stoxx Europe 600 Index’s rally from a two-year low, as France, Spain, Italy and Belgium imposed short-selling bans. Regulators imposed bans to stabilize markets after Societe Generale SA dropped to its lowest price since March 2009 on Aug. 10. A gauge of European banks increased 4 percent, for its second day of gains.
“It may generate a positive short-term reaction in the stock market as they are clearly targeting the short-selling of the banks,” Michael Holland, chairman and founder of New York- based Holland & Co., said in a telephone interview. His firm oversees more than $4 billion.
Nvidia added 1.8 percent to $13.65. The company is wooing customers away from AMD in the market for so-called discrete graphics chips, which are used in notebook computers, according to Mercury Research analyst Dean McCarron. The company has also started winning more orders for its Tegra processors from makers of mobile phones.
Hewlett-Packard gained 3.2 percent to $32.04. The biggest personal-computer maker was raised to “buy” from “hold” at Jefferies. The 12-month share-price estimate is $40.
Consumer Confidence
Stocks briefly erased gains after a report showed that confidence among U.S. consumers plunged in August to the lowest level since May 1980, adding to concern that weak employment gains and volatility in the stock market will prompt households to retrench.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slumped to 54.9 from 63.7 the prior month. The gauge was projected to decline to 62, according to the median forecast in a Bloomberg News survey.
The stock market’s fastest electronic firms boosted trading threefold during the rout that erased $2.2 trillion from U.S. equity values, stepping up strategies that profit from volatility, according to one of their biggest brokers.
The increase from Aug. 1 to Aug. 10 over their 2011 average surpassed the 80 percent rise in U.S. equity volume, showing that high-frequency traders made up more of the market during the plunge, Gary Wedbush, executive vice president and head of capital markets at Wedbush Securities, said in a telephone interview. Wedbush is the largest broker supplying bids and offers on the Nasdaq Stock Market, according to exchange data.
“We’re seeing a tremendous amount of high-frequency trading,” said Wedbush, whose company is one of the biggest execution and clearing brokers catering to high-speed firms. “Their business is a trading business, and volatility creates far more opportunities. Some of their algorithms and automated systems are trading two, three or five times as many shares as they would have in a more normalized volatility environment.”
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