Retail sales, consumer sentiment send stocks higher

NEW YORK | Encouraging news about how consumers feel about the economy and how much they’re spending sent stocks higher Friday.

The strong showing in retail sales last month raised hopes that consumers are starting to feel more comfortable opening their wallets after months of building savings. The 1.3 percent increase was more than double the gain that analysts had forecast.

The government’s retail report came as a relief to many investors who have been frustrated that consumer spending, a mainstay of the U.S. economy, has remained in a funk even as other parts of the economy recover.

A separate report showing an increase in consumer confidence signaled that spending could continue to rise. The preliminary Reuters/University of Michigan consumer sentiment index increased more than expected in December.

In another welcome sign, the Commerce Department reported a 0.2 percent gain in business inventories in October, breaking a 13-month streak of declines. That’s a signal that businesses expect consumers to step up their purchases.

Hopes of an economic rebound have driven stocks sharply higher for nine months, but the advance has slowed in the past month as investors lock in the year’s huge returns and question what catalysts there might be to power the market higher next year.

The Dow Jones Industrial Average rose 65.67, or 0.6 percent, to 10,471.50. The Standard & Poor’s 500 index gained 4.06, or 0.4 percent, to 1,106.41, while the Nasdaq composite index slipped 0.55, or less than 0.1 percent, to 2,190.31.

The Dow rose 0.8 percent for the week, its second straight weekly gain. The S&P; 500 index rose for a third straight week, edging up less than 0.1 percent. The Nasdaq slipped 0.2 percent for the week.

Friday’s gains in stocks came even as the dollar rose. The ICE Futures US dollar index rose 0.7 percent.

Gold fell $6.30 to $1,119.80 an ounce. Oil slumped for an eighth day, sliding 67 cents to $69.87 a barrel on the New York Mercantile Exchange.

A steep drop in the number of employers who cut jobs last month and other signs of improvement in the economy have brought expectations that the Federal Reserve will raise interest rates sooner rather than later. That would boost the dollar and initially hurt stocks as investors look for better returns elsewhere.

Treasury prices mostly fell Friday after the encouraging economic reports weakened demand for safe-haven investments. That pushed yields higher. The yield on the benchmark 10-year Treasury note rose to 3.55 percent from 3.50 percent late Thursday.