Lowe's results improve Wall Street's retail mood

<!--StartFragment--> US STOCKS rallied yesterday as better-than-expected results from the number two US home improvement retailer, Lowe&rsquo;s, helped spark broad-based buying on hopes the recession is easing and consumer spending is stabilising.<br /><br />Investors&rsquo; optimism extended to sectors closely aligned with economic growth, including homebuilders, banks, energy companies and retailers. Positive broker comments on <strong>Bank of America</strong>, up nearly 10 per cent at $11.73, boosted financial shares, while rising oil prices improved the outlook for energy names.<br /><br />Shares of Lowe&rsquo;s rose 8.1 per cent to $19.94 after the company raised its full-year forecast due to signs that the housing market&rsquo;s decline may be ebbing. Lowe&rsquo;s chief executive Robert Niblock said consumer confidence has improved in recent weeks, and housing turnover is showing &ldquo;signs of a bottom.&rdquo;<br /><br />That optimism helped lift shares of Lowe&rsquo;s top rival <strong>Home Depot</strong>, which added 6.6 per cent to $26.02 a day before the Dow component is set to deliver its own quarterly scorecard.<br /><br />The Dow Jones industrial average gained 235.44 points, or 2.85 per cent, to 8,504.08. The Standard &amp; Poor&rsquo;s 500 Index rose 26.83 points, or 3.04 per cent, to 909.71. The Nasdaq Composite Index advanced 52.22 points, or 3.11 per cent, to 1,732.36.<br /><br />The S&amp;P 500 recently climbed from a 12-year closing low on 9 March, rising 37.4 per cent through the close on 8 May. But after the benchmark index gave up some ground last week amid concerns about the economy and a flurry of secondary stock offerings, the S&amp;P 500 was up 34.5 per cent from that low at yesterday&rsquo;s close.<br /><br />The S&amp;P also moved back above 900, which some investors see as a key psychological level. The S&amp;P closed above 900 in early May for the first time since the start of the year, but fell back into the 800s last week.<br /><br />The Chicago Board Options Exchange Volatility Index (VIX) Wall Street&rsquo;s favourite barometer of investor fear, fell 8.7 per cent to settle just above 30, a key psychological level. At 30.24, the VIX closed at its lowest level in more than eight months.<br /><br />The Dow Jones US home construction index jumped 7.4 per cent, helped by Citigroup&rsquo;s upgrade of <strong>Lennar</strong> shares to &ldquo;buy&rdquo; while an S&amp;P index of retailers&rsquo; shares climbed 4.5 per cent. Lennar&rsquo;s stock surged 13.7 per cent to $10.02. <!--EndFragment-->