Retail Sales Data, Earnings Spark Rally


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Stocks were solidly to the upside, but well off of session highs, as traders weighed strong retail sales data against a disappointing report on consumer sentiment.

Today's Markets

As of 11:08 a.m. ET, the Dow Jones Industrial Average climbed 87.6 points, or 0.77%, to 11,566, the S&P 500 jumped 11.8 points, or 0.98%, to 1,215 and the Nasdaq Composite leaped 28 points, or 1.1%, to 2,648.

The technology and energy sectors posted strong performance on Friday, with stocks like Google (NASDAQ:GOOG) and Schlumberger (NYSE:SLB) zipping higher.  However, financials lagged behind for a second day.

Energy markets broadly rallied on Friday, tracking a considerably weaker dollar.  Light, sweet crude jumped $2.87, or 3.5%, to $87.15 a barrel.  Wholesale RBOB gasoline gained 7 cents, or 2.4%, to $2.82 a gallon.

Retail sales jumped 1.1% in September, or 0.6% excluding the automobile sector.  Analysts forecast gains of 0.7%, or 0.3% excluding vehicles. Sales held up "surprisingly well" despite the market turmoil and still weak labor conditions, according to Peter Boockvar, managing director at Miller Tabak + Co. Business purchases have helped buoy vehicle sales despite weakness in the consumer sector in the past two years, according to a research note from Goldman Sachs.

Consumer sentiment, however, took an unexpected fall in early October.  The Reuters/University of Michigan gauge of consumer sentiment fell to 57.5 from 59.4, missing expectations of 60.2.  Additionally, consumers' expectations for the future dropped to 47 from 49.4 -- the lowest level since 1980. Confidence in the consumer sector is a major factor in purchasing decisions, so it may impact retailers.

Google unveiled earnings of $3.63 billion, or $9.20 a share, on an adjusted basis, easily topping analysts' estimates of $8.74 a share after the closing bell on Thursday.  The search giant benefited from strong advertising revenue, and said its bid to tap into the red hot social networking market is proceeding at quick pace.  Shares surged more than 5%.

Despite a relatively weak showing in the prior session, Wall Street has been on a clear trend to the upside.  Indeed, the blue chips have climbed 5.2% this month, and are less than 1% from moving into positive territory for the year.  The broader S&P 500 has been up in six of the past eight trading sessions, tacking on 6.4% so far this month.

Traders were also keeping a close eye on the Group of 20 financial ministers and central bank officials who are kicking off a three-day meeting in Paris.  The group, which represents many of the world's biggest economies, is expected to discuss methods of tackling Europe's twin sovereign debt and financial crises.  In a sign of the lingering tensions there, Standard & Poor's sliced Spain's credit rating to "AA-" from "AA" amid concerns about the country's economy.

European stocks fared well despite the downgrade, with the Euro Stoxx 50 recently jumping 1.4% to 2,367. The euro soared 0.74% to $1.39, while the greenback slipped 0.43% against a basket of world currencies. The euro is now at a four-week high against the dollar.

In metals, gold gained $13.30, or 0.78%, to $1,681 a troy ounce. The benchmark 10-year Treasury note recently yielded 2.214% from 2.185%.

Foreign Markets

The Euro Stoxx 50 rose 1.5% to 2,366, the English FTSE 100 gained 1.4% to 5,476 and the German DAX climbed 1.5% to 6,002.

In Asia, the Japanese Nikkei 225 dipped 0.85% to 8,748 and the Chinese Hang Seng slid 1.4% to 18,502.