US stocks ended near the session’s highs yesterday, with investors favouring shares of retailers after encouraging chain-store sales raised confidence ahead of today’s jobs report.
The Morgan Stanley retail index rose 2.8 per cent, driven by companies such as Sears Holdings, up almost eight per cent, and Ross Stores, up six per cent and at a new high.
US chain-store sales climbed 4.8 per cent in January. Along with rising service-sector activity and improved jobless claims figures, the stronger-than-expected retail figures added to growing evidence of an economic rebound.
“The strength in the retail sector is probably the standout feature today,” said Nick Kalivas, an analyst at MF Global. “You have generally a profit-taking, consolidative market after a couple of days of big run-ups [and] in front of the employment report tomorrow.”
The wider market had come under pressure for most of the day as some investors said stocks were extended after weeks of gains, while a stronger dollar weighed on the natural resource sector.
Kalivas said the material and energy sectors were ripe for profit-taking while retail stocks had lagged the rally since the beginning of the year over concerns about the strength of consumer spending.
The Dow Jones industrial average gained 20.29 points, or 0.17 per cent, to 12,062.26. The Standard & Poor’s 500 Index rose 3.07 points, or 0.24 per cent, to 1,307.10. The Nasdaq Composite Index added 4.32 points, or 0.16 per cent, to 2,753.88.
The S&P 500 has rallied more than 10 per cent since breaking out of a trading range at the start of December and is up 21 per cent since the end of August.
Data showed the US services sector grew in January at its fastest pace since August 2005, and initial claims in the latest week for unemployment benefits fell more than expected.
The S&P’s energy sector has been the top gainer this year, rallying 9.4 per cent, while industrials and technology each have rallied six per cent. Over that time the Morgan Stanley retail index has fallen 2.5 per cent.
Also in the retail sector BJ’s Wholesale Club said it may put itself up for sale.
Shares of BJ’s, which is under pressure from a private equity firm that may make a hostile bid, jumped 12.2 per cent.
Trading volume was 7.69bn shares on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, below last year’s average.