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Wall Street keeps eye on US consumer

A resurgent Wall Street will keep a close eye on the state of the US consumer in the coming week for signs of a stronger economic recovery heading into the year-end holidays.

With a critical report on US retail sales looming, the stock market has rallied over the past two weeks to near this year’s highs, but may need a new spark to extend its gains, analysts said.

The Dow Jones Industrial Average galloped higher by 2.46 percent to 10,270.47, in a second consecutive strong week for Wall Street and just off 13-month highs hit on Wednesday.

The technology-heavy NASDAQ composite climbed 2.62 percent on the week to 2,167.88 and the broad-market Standard & Poor’s 500 index rose 2.26 percent to 1,093.48.

One critical element for the market will be tomorrow’s report on US retail sales, expected to show a 0.9-percent rise for last month after a slide of 1.5 percent in September.

“Retail trade looks to have bounced back from September’s dip, but the most important months of the year still lie ahead, and both employment and ­confidence survey trends point to a tame holiday shopping season,” Avery Shenfeld at CIBC World Markets said.

Over the past week, the market drew strength from positive news from the US retail sector, including strong earnings from sector leader Wal-Mart and upbeat guidance from others such as JC Penney.

Yet analysts say consumers will have to emerge from their retrenchment, especially in the critically important holiday shopping season, to fuel the economic recovery.

“We’ve had our end-of-recession relief rally ... now we’re in a wait-and-see mode to see how strong the recovery is going to be,” Gina Martin at Wells Fargo Securities said.

Bonds fell on the week. The yield on the 10-year Treasury bond increased to 3.503 percent from 3.392 percent a week earlier and that on the 30-year bond rose to 4.394 percent against 4.236 percent. Bond yields and prices move in opposite directions.

In the coming week, the market also will react to reports on US inflation, housing starts and industrial production.
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