US stocks jump after report of stronger consumer spending
U.S. stocks rose again Thursday as investors were pleased with a report that showed spending by U.S. consumers grew in July, along with wages and salaries. Health care and technology companies lead the way and the Nasdaq composite closed at a record high.
The Commerce Department said consumer spending grew at its fastest pace in three months. Companies that sell everything from cosmetics to toys to shoes advanced as investors bet Americans would shop more. Biotech drug companies, drug distributors, and scientific equipment companies made some of the biggest gains in health care. Technology companies advanced for the fourth day in a row and closed at record highs. Gasoline futures continued to spike as Tropical Storm Harvey left large parts of oil drilling and refining and pipelines out of commission.
The Commerce Department said consumer spending rose 0.3 percent in July, the best showing in three months, as wages and salaries increased. Stocks climbed a day ago after the government raised its estimate of second-quarter economic growth. On Friday investors will look at the government's monthly jobs report for data on employment as well as wages.
"The economy is gaining traction, and inflation at this stage is still modest," said Quincy Krosby, chief market strategist at Prudential Financial. That's been good for stocks, as low inflation and low interest rates make stocks more appealing and securities like bonds less appealing.
Krosby added that other news, including a manufacturing survey from China, "helped underpin the notion that it is a global recovery in the economy."
The Standard & Poor's 500 index climbed 14.06 points, or 0.6 percent, to 2,471.65, its highest close in three weeks. That allowed the index to finish August with a tiny gain. The Dow Jones industrial average added 55.67 points, or 0.3 percent, to 21,948.10. The Nasdaq composite gained 60.35 points, or 1 percent, to 6,428.66, above the record high it set in late July. The Russell 2000 index of smaller-company stocks picked up 13.95 points, or 1 percent, to 1,405.28.
Drugmaker Biogen gained $12.83, or 4.2 percent, to a two-year high of $316.58 and Gilead Sciences rose to its highest price in more than a year as it moved up $2.51, or 3.1 percent, to $83.74.
Technology companies, which are trading at record highs, rose for the fourth day in a row. Alphabet, Google's parent company, gained $11.61, or 1.2 percent, to $955.24 and Microsoft picked up 76 cents, or 1 percent, to $74.77.
Among retailers, Amazon gained $13.01, or 1.3 percent, to $980.60. Jewelry seller Tiffany added $3.75, or 4.3 percent, to $91.40. Tool maker Stanley Black & Decker picked up $4.22, or 3 percent, to $144.
After three days of losses linked to Tropical Storm Harvey, benchmark U.S. crude jumped $1.27, or 2.8 percent, to $47.23 a barrel in New York as the rains hitting the Gulf Coast began to abate. Brent crude, used to price international oils, added $1.52, or 3 percent, to $52.38 a barrel in London.
Already at two-year highs, wholesale gasoline prices climbed at an even faster pace as some refining operations and pipelines around the Gulf Coast region remained offline. The price of wholesale gasoline surged 26 cents, or 13.5 percent, to $2.14 a gallon.
Heating oil rose 8 cents, or 5 percent, to $1.76 a gallon and natural gas gained 10 cents, or 3.4 percent, to $3.04 per 1,000 cubic feet.
Campbell Soup skidded to a two-year low after the company said it expects sales to keep falling over the next year as consumers prefer fresh foods over its canned soups and bottled juices. The company forecast a smaller-than-expected annual profit after it reported a weak fourth quarter that included disappointing sales of snack food. Its stock lost $4.05, or 8.1 percent, to $46.20. Competitor Mondelez dropped 97 cents, or 2.3 percent, to $40.66 and Kraft Heinz gave up $1.18, or 1.4 percent, to $80.75. All of those companies have seen their stocks tumble this year.