The Dow Jones Industrial Average rose over 1% early Friday after June U.S. retail sales came in better than expected. The Nasdaq and S&P 500 also gained but are on track for weekly losses.
Dow Jones Higher After Retail Sales
In early trading, the Dow Jones industrials were up 1.1%. The S&P 500 gained around 1% and the Nasdaq was up 0.7%. Small caps were higher as well, with the Russell 2000 up 1.2%. Volume was higher on the Nasdaq and on the NYSE vs. the same time on Thursday. Financials and energy stocks led the upside among the S&P 500 sectors, while utilities lagged.
U.S. retail sales came out at 8:30 a.m. ET. Retail sales rose 1% in June on a month-over-month basis, exceeding estimates for a rise of 0.9%. Retail sales fell 0.3% in May.
However, the better-than-expected sales do not necessarily reflect an increase in consumption. “Virtually all the increase reflects higher prices rather than more consumption,” said Sal Guatieri, senior economist with BMO Capital Markets. “American households are spending nearly as much money as they did earlier, but largely to keep up with higher prices, not to actually buy more stuff.”
U.S. Stock Market Today Overview
|Last Update: 10:22 AM ET 7/15/2022|
While sales rose 8.4% on a year-over-year basis for June, the increase is not so much when compared with the current 9.1% yearly inflation rate.
Investors were watching today’s retail sales report closely because any sign of heightened consumer spending could trigger the Fed toward a 100-basis point rate hike this month. “That said, today’s report may cool talk of a near-term recession, while still keeping the Fed on track for a 75-bp rate hike later this month,” added Guatieri.
Stocks To Buy And Watch
Shares of energy drink maker Monster Beverage (MNST) briefly broke out past a 98.83 double-bottom entry. Shares faded from the buy point but volume was higher than normal. Meanwhile, over in the IBD 50, energy drink stock Celsius (CELH) led the upside with a rise of nearly 5% on Friday.
Dow Jones leader and fellow IBD 50 stock UnitedHealth (UNH) reported better-than-expected earnings while also increasing full-year earnings guidance. The managed care industry group has hosted several breakouts recently, including UnitedHealth, Centene (CNC) and Humana (HUM).
Analysts expected UnitedHealth to show earnings of $5.20 per-share on revenue of $79.68 billion for the second quarter. The health care provider’s bottom line rose 18.5% vs. a year earlier to $5.57 per share on an adjusted basis. Revenue grew 12.6% to $80.33 billion.
The stock popped in heavy volume, up 4% as shares regained a 518.80 buy point from a cup-with-handle base, according to a MarketSmith analysis. The stock is also above a 507.35 double-bottom entry. Centene stock rose 2.5%, reclaiming an 87.44 double-bottom buy point, while Humana climbed 2.1% and also reclaimed a buy point.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
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