US stocks end cold streak on strong retail sector
US stocks ended a five day losing streak on the heels of a booming retail sector. Best Buy (NYSE:BBY) , TJX (NYSE:TJX) and Urban Outfitters (NASDAQ:URBN) all rallied as quarterly profits beat expectations. Best Buy Co., the world’s largest consumer-electronics retailer, advanced more than 13 percent to $34.80 a share after posting its biggest quarterly profit since February 2011. Several factors contributed to Best Buy’s success, including downsizing management, closing underperforming stores, matching competitor prices and dedicating more store space to smartphones and tablets.
TJX Companies Inc., an off-price retailer of apparel and home fashions, upped its full-year forecast after second quarter sales and profits beat analysts’ expectations. Shares rose 6.88 percent to $54.24. Rounding out Tuesday’s bullish retailers was Urban Outfitters, which advanced more than 8 percent to $43.19 a share. The leading apparel company reported an EPS of 51 cents over the second quarter, with sales also surpassing analysts’ expectations.
As a collective, the retail sector was the second-best performer among the 24 industries, putting up a collective gain of 1.4 percent. The benchmark indices responded in-kind. The NASDAQ Composite soared 0.68 percent to 3,613.59. The S&P 500 advanced 0.38 percent to 1,652.35 after recording its biggest fall in ten months. The Dow Jones Industrial Average rallied early in the New York session before succumbing to pressures, trading sideways to 15,003.00. Last week the DJI incurred its worst decline in 14 months on the heels of a broad market correction.
Strong corporate earnings are a sign the economy is growing. Almost three-quarters of S&P companies to report quarterly earnings have beat analysts’ estimates.
On Wednesday the market’s attention will shift from earnings to monetary policy, led by the release of the June FOMC meeting minutes. A hawkish outlook on interest rates could make the equity market’s rebound short-lived, fuelling speculation for a Federal Reserve asset taper ahead of the autumn solstice.
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