S&P, Dow end at two-year high on Fed, retail sales

By Ryan Vlastelica

NEW YORK (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) extended a rally that started in September to close at two-year highs on Thursday, a day after the Federal Reserve unveiled a plan to boost the economy.

A bullish read on consumers also boosted shares as many retailers posted stronger-than-expected sales for October. The S&P retail index (.RLX: ) gained 1.7 percent and apparel maker Gap Inc (GPS.N: ) added 6.1 percent to $20.43.

Confounding expectations of a sell-off after the Fed’s asset-buying plan, investors instead focused on the flood of cheap money expected to flow into the banking sector from the U.S. central bank’s program to buy $600 billion more of Treasury debt.

“Given the political changes, the monetary policy changes, as well as good seasonal indicators, the market could trend higher through December, said Eric Teal, chief investment officer at First Citizens Bancshares in Raleigh, North Carolina, which manages about $5 billion. “We could move up another 5 percent even from these levels.”

Volume reached its highest level since July 1 with 10.34 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above the year-to-date daily average of 8.73 billion.

The S&P 500 index is up about 16 percent since the start of September as investors bet that Fed action and Republican gains in the U.S. midterm election would create a better environment for corporate profits. The Dow index closed at its highest since the collapse of Lehman Brothers bank in September 2008.

The closely watched U.S. non-farm payroll report for October will be released Friday before the market opens, and employment is seen rising for the first time since May with 60,000 non-farm payrolls added in the month. The unemployment rate is expected to remain elevated at 9.6 percent.

COMMODITIES GAIN

Thursday’s 5.3 percent decline in the CBOE Volatility Index (.VIX: ), Wall Street’s so-called fear gauge, suggested investors were confident the Fed’s efforts will support market gains. . For a graphic see http://r.reuters.com/fuh83q.

An index of commodity prices (.CRB: ) rose 2.4 percent and hit its highest level in more than two years while the U.S. dollar fell.

Mining company Freeport McMoRan Copper and Gold Inc (FCX.N: ) jumped 7 percent to $103.89, a price not seen since 2008. The S&P materials index (.GSPM: ) was up 3.3 percent, and Dow component Exxon Mobil Corp (XOM.N: ) added 2.1 percent to $69.38.

The Dow Jones industrial average (.DJI: ) closed up 219.71 points, or 1.96 percent, at 11,434.84. The Standard & Poor’s 500 Index (.SPX: ) was up 23.09 points, or 1.93 percent, at 1,221.05. The Nasdaq Composite Index (.IXIC: ) was up 37.07 points, or 1.46 percent, at 2,577.34.

Retail stocks surged after October’s same-store sales data, which appeared to bode well for the upcoming holiday shopping season. Target Corp (TGT.N: ) rose 1.5 percent to $54.76 while Macy’s Inc (M.N: ) advanced 6.6 percent to $25.56.

Starbucks Corp (SBUX.O: ) gained 2.5 percent to $30.49 in extended trading after it reported fourth-quarter earnings that beat expectations and raised its full-year profit view.

Dow component Kraft Foods Inc (KFT.N: ) posted an adjusted third-quarter profit (Read more your timing to make a profit.) 1 cent a share ahead of expectations. It also affirmed its full-year outlook, and its stock rose 4 cents to $31.83.

In what could be seen as conflicting technical signals, the S&P 500 daily moving average convergence-divergence chart triggered a buy signal for the first time since October 18, but its relative strength index, or RSI, jumped near 76. An RSI reading above 70 indicates an overbought level.

About five stocks rose for every one that fell on the New York Stock Exchange and more than three rose for every one that fell on the Nasdaq.

(Editing by Padraic Cassidy)

S&P, Dow end at two-year high on Fed, retail sales