Dow adds 100 points, stocks manage weekly gains as retail sales, consumer sentiment rise

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U.S. stock benchmarks closed mostly higher Friday, with gains partly attributed to better-than-expected retail sales in September, along with an improvement in consumer sentiment, relieving some fears about a slow economic recovery.

Wall Street sentiment was also supported by news that a Pfizer vaccine might be submitted for approval by next month, even as the spread of the viral outbreak has forced some restrictions on business and travel in major European cities.

The Dow Jones Industrial Average (DJIA) added 112.11 points, or 0.4%, to close at 28,606.31; the S&P 500 index (SPX) tacked on 0.47 points to reach 3,483.81; and the Nasdaq Composite Index (COMP) lost 42.32 points, or 0.4%, to settle at 11,671.56, after earlier hitting a peak at 11,827.42.

On Thursday, the Dow fell 19.80 points, or 0.1%, to 28,494.2, but well off its intraday nadir of 28,181.54; the S&P 500 index finished down 5.33 points to end at 3,483.34, a drop of 0.2%, while the Nasdaq Composite Index slumped by 0.5%, a fall of 54.86 points to 11,713.8.

For the week, the Dow eked out a 0.1% gain, the S&P 500 rose 0.2%, and the Nasdaq Composite advanced 0.8%.

The stock market on Friday snapped a three-session skid to end a choppy week, with a report on U.S. retail sales suggesting consumer spending is more resilient than expected in the midst of the worst pandemic in more than a century.

U.S. retail sales in September rose 1.9%, compared to consensus estimates from economists polled by Dow Jones for 0.7%, underscoring that consumers, the lynchpin of economic health, continue to buy amid the viral outbreak that has hobbled the economy for months.

“Amid a stagnating labor market, the jump in retail sales this month suggests consumer strength is pretty robust—with the highest number we’ve seen in three months,” wrote Mike Loewengart, director investment strategy at E-Trade Financial, in a Friday note.

“The momentum on that front could be a positive for the market as investors look for signs of recovery. That said, it remains to be seen if this is an outlier or trend,” he wrote.

Meanwhile, Pfizer Inc.’s (PFE) announcement that it could have a late-stage experimental coronavirus vaccine ready for emergency-use authorization by late November—if it proves successful in trials—provided another lift to markets that have been dogged this week by reports of the spread of the viral pandemic inside and outside the U.S.

More than half-a-dozen states, including Ohio and Michigan, reported record numbers of new coronavirus cases Thursday, pushing the U.S.’s single-day total above 60,000 for the first time in over two months, the Wall Street Journal reported.

Read: Coronavirus tally: Global cases of COVID-19 38.9 million, 1.09 million deaths and U.S. nears 8 million cases

White House and Democratic negotiators agreed to include a national coronavirus-testing strategy in relief legislation, but Senate approval for any large-scale stimulus is unlikely, even as President Donald Trump pushed Senate Majority Leader Mitch McConnell to “go higher“ and push forward a more expansive package than the White House’s current $1.8 trillion offer.

Pre-election fiscal stimulus would be “a nice-to-have,” said Michael Stritch, chief investment officer at BMO Wealth Management. “I don’t know if it’s a need-to-have. Without additional stimulus, we will continue to make progress but it will be a little more uneven and lumpy. “

There are also many possible outcomes from the upcoming November election, Stritch said in an interview. “It’s hard to make big bets ahead of that.”

See: What will put the final nail in the fiscal stimulus coffin? The calendar, maybe

Even as some market participants have rotated toward value stocks and cyclical trades, “We have yet to embrace the cyclical part of the story,” Stritch said. “We want to make that move but we just have to see that consistency. We’re in the wait and see camp.”

In other economic reports, a reading on U.S. industrial production came in weaker than expected, dropping 0.6% in September, compared against an expected increase based on average economist estimates for a rise of 0.5%.

Some took that as as sign of weakness in the economy despite the strong retail sales report. “Industrial output came in well below expectations, one of the first real signs that the recovery is losing momentum under the weight of the ongoing health crisis and fading support from fiscal relief,” wrote economists at Oxford Economics in a Friday report after the data.

Meanwhile, a preliminary reading of consumer sentiment index edged up to 81.2 this month from a revised 80.4 in September, the University of Michigan said Friday.

The yield on the 10-year Treasury  note (BX:TMUBMUSD10Y) was up around one basis point to 0.739% after the strong retail sales report. Yields and bond prices move in opposite directions.

In global equities, Hong Kong’s Hang Seng Index (HK:HSI) closed 0.9% higher and Japan’s Nikkei 225 (JP:NIK) declined 0.4%, China’s Shanghai Composite Index (CN:SHCOMP) finished up 0.1%.

In Europe, the pan-European Stoxx 600 Europe (XX:SXXP)  closed up 1.3% and London’s FTSE 100 (UK:UKX)  gained 1.5%.

Gold prices (GCZ0)  settled lower, down 0.1% at $1,906.40 an ounce. It was the first weekly decline for the precious metal in three weeks. Oil futures fell, with  West Texas Intermediate crude for November delivery (CRUD)  down 8 cents, or 0.2%, to settle at $40.88 a barrel on the New York Mercantile Exchange.

The greenback was 0.2% lower on Friday, based on the ICE U.S. Dollar Index (DXY) but was on track for a weekly gain of 0.7%.

Read: Stocks have 5% more upside this year, according to this measure, which has been right since March

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