US Close: Stocks pop on impressive US data, American Consumer is still strong

US stocks rallied after an impressive retail sales report, solid industrial production data, and retail earnings showed the consumer is handling the current pricing increases. All signs are pointing to a very strong holiday season for retailers and that should help keep sending stocks higher. Financial markets are fixated on inflation, but now agree that it can get a little uglier over the next couple of months, before traders get unnerved.

The Nasdaq outperformed as today’s risk-on tone was accompanied by steadying Treasury yields, a boost to Chinese stocks Alibaba and Baidu, and as Wall Street embraced the EV trade.

Retail Sales

The US consumer shrugged off higher prices and opened their pocketbooks in October. Sales at US retail stores surged by a seasonally adjusted 1.7% in October compared with the previous month, higher than the consensus estimate of 1.0%. The jump in online sales is a good sign that holiday shopping will be very strong this season. Everything is being bought as the American consumer spends the leftover stimulus money in their bank accounts.

This retail sales report contradicts last week’s consumer sentiment reading that hit a 10-year low. Complimenting today’s retail sales report was solid earnings from Walmart. The key takeaway from Walmart is that consumers are still very strong as they are both spending and shopping more. Home Depot also posted robust results that show the homeowner is still not done fixing up their home.

Industrial Production

Both industrial and manufacturing production readings showed better-than-expected gains in October as companies showed improvement over getting their hands on supplies. The prior month’s report was dragged down by Hurricane Ida, so the improvement will be taken with a grain of salt. If factory output continues to rise in the coming months despite higher energy prices, growth forecasts for 2022 will need to be upgraded.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya