Stocks post early gains after report showing boost in retail sales, overseas markets rally

Stocks rise early as retail sales rebound in Oct.

NEW YORK — Stocks rose in morning trading Monday after a new report showed retail sales rebounded more than expected in October because of a boost in auto sales.

The U.S. market also followed overseas gains that were propelled by a weakening dollar and stronger gold prices, which again boosted commodities and shares of companies that produce raw materials.

The Commerce Department said retail sales rose 1.4 percent in October, easily surpassing the 0.8 percent economists polled by Thomson Reuters forecast. It was a sharp rebound from a 2.3 percent decline seen in September.

However, excluding the gain from autos, sales rose just 0.2 percent, half the increase economists predicted and tempering some of the excitement over the data.

Jamie Cox, a managing partner at Harris Financial Group, said the sales growth was a good sign heading into the holiday shopping season, especially since the data were not affected by factors such as sales tax holidays and government stimulus programs that were present in preceding months.

The data provided a truer picture of the consumer spending, which is improving but still weak, Cox said.

The Dow Jones industrial average rose 74.90, or 0.7 percent, to 10,345.37. The Standard & Poor’s 500 index rose 9.50, or 0.9 percent, to 1,102.98, while the Nasdaq composite index rose at 14.99, or 0.7 percent, to 2,182.87.

General Motors Co. said it lost $1.2 billion in the period since emerging from bankruptcy and the end of the third quarter on Sept. 30. Despite the loss, it said it will begin to repay $6.7 billion in government loans and was seeing a stabilization in its business.

Home improvement retailer Lowe’s Cos. said its profit dipped 30 percent in the third quarter, but it matched earnings expectations. Despite the declining earnings, Lowe’s said it is seeing stabilization in some of the hardest hit housing markets.

Investors will get more insight into consumers as key retailers such as Home Depot Inc., Target Corp. and TJX Cos. report earnings Tuesday.

Cox said the broad range of retailers, from discounters to high-end sellers, reporting earnings during the week will provide insight into whether shoppers are willing to step up their spending and move back toward more expensive goods.

Corporate outlooks from the companies will be just as critical as actual quarterly results because they are entering the key holiday shopping season. Disappointing sales through the end of the year could halt the market’s rally.

Other economic readings on inflation, housing starts and industrial production are due out later in the week. The Labor Department also reports its weekly unemployment claims data on Thursday.