The S&P 500 gained 53.72 points, or 1.36%, to end at 4,003.66 points, the Nasdaq Composite gained 149.83 points, or 1.36%, to 11,174.34 and the DJIA rose 395.94 points, or 1.18%, to 34,096.22
U.S. stocks rallied on Tuesday in light trading volume as a sales forecast by Best Buy dampened concerns high inflation would lead to a dismal holiday shopping season while a bounce in oil prices helped lift energy shares.
Best Buy Co Inc. shot up as the best performing stock on the S&P 500 index, after the retailer forecast a smaller drop in annual sales than previously announced and expressed confidence a ramp up in deals and discounts will entice more customers.
The gains in Best Buy helped boost the S&P 500 retail index.
In contrast, Dollar Tree Inc. tumbled as the worst performing S&P 500 component, which also capped gains for the retail index as the discount retailer cut its annual profit forecast for the second time.
If you take the continuum of income and consumers out there, the upper half of that is relatively inelastic to some costs going up to some extent or another where the bottom half is going to be more sensitive, said Shawn Cruz, head trading strategist at TD Ameritrade in Chicago.
So the Dollar Trees of the world really don’t have much ability to pass through those costs so they are going to get hit pretty bad, Cruz said.
According to preliminary data, the S&P 500 gained 53.72 points, or 1.36%, to end at 4,003.66 points, while the Nasdaq Composite gained 149.83 points, or 1.36%, to 11,174.34. The Dow Jones Industrial Average rose 395.94 points, or 1.18%, to 34,096.22.
Also providing support was the energy sector, which climbed after two sessions of declines as Saudi Arabia said OPEC+ was sticking with outputs cuts, declining a report on Monday that said the alliance was considering increasing output which sent crude prices sharply lower.
As investors continue to try and gauge the path of Federal Reserve rate hikes, Cleveland Fed President Loretta Mester reiterated on Tuesday that lowering inflation remains critical for the central bank, a day after supporting a smaller rate hike in December. Kansas City President Esther George said a ‘calmer’ labour market that sees less churn could lower inflationary pressures.
Investors were also awaiting remarks by St. Louis Fed Reserve President James Bullard on Tuesday ahead of the minutes from the Fed’s November meeting scheduled for Wednesday.
