Strong gains at Wall Street

Better-than-expected economic data and rebound in oil prices boost sentiment

The three main stock-market indexes rang up record highs on Thursday, 11 August 2016 as better-than-expected economic data and a rebound in oil prices boosted Wall Street sentiment. The benchmark index erased a modest weekly loss as stronger-than-expected earnings results from retail names and a reversal in crude oil spurred a risk rally in the broader market. Other focal points impacting today's trade included a rebound in the dollar and leadership from the heavily-weighted health care, industrial and consumer discretionary sectors.

The Dow Jones Industrial Average rallied 117.86 points, or 0.7%, to close at 18,613.52. The average was led by a 2.9% jump in Nike shares. The Nasdaq Composite Index gained 23.81 points, or 0.5%, to finish at 5,228.40. The S&P 500 index rose 10.30 points, or 0.5%, to close at 2,185.79.

The major averages began the day on a higher note as above-consensus bottom-line results from the likes of Alibaba, Kohl's and Macy's improved investor sentiment. The three names bolstered the consumer discretionary space which ended among the leaders. Additionally, a rebound in oil futures contributed to a positive bias at the start of today's session.

Energy shares led the gains with a 1.3% jump, while consumer-discretionary stocks advanced 1%, thanks in part to a big jump in shares of Macy's, and Kohl's following earnings.

The gains were supported by weekly jobless claims, which pointed to continued low levels of layoffs, while both import and export prices inched up despite a decline in fuel costs, suggesting a possible pick up in inflation. The Federal Reserve has been looking at a return of healthy levels of inflationbut low crude-oil costs have stymied thatto determine when to raise interest rates.

Crude oil was in focus as investors examined a mixed reading of the International Energy Agency's monthly report and responded to commentary from Saudi Oil Minister Khalid al-Falih. The IEA trimmed its 2017 global oil demand estimate to 1.2 million barrels per day (from 1.3 million barrels), but also stated that it expects the supply overhang to be gone by the end of 2016. Separately, the Saudi oil minister indicated that the current market situation and potential plans to stabilize oil prices would be discussed at the cartel's next meeting on September 26-28. Market participants likely took this news with a grain of salt, remaining skeptical of potential production cuts from the oil collective. Nevertheless, crude oil rallied 4.2% on the news, likely benefiting from a fair amount of short covering.

The U.S. Dollar Index ended higher as the pound, euro, and yen each lost ground to the greenback.

Treasuries settled near session lows as yields rose throughout the complex. The yield on the 10-yr note finished higher by seven basis points at 1.56%.

Today's participation was below the recent average as fewer than 761 million shares changed hands at the NYSE floor.

Tomorrow's economic data will include July PPI (consensus 0.0%) and July Retail Sales (consensus +0.4%), which will each cross the wires at 8:30 ET. Separately, the preliminary reading of the Michigan Sentiment Index for August (90.2) and Business Inventories for June (consensus +0.1%) will be released at 10:00 ET.

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