Stocks higher following retail sales increase

Stocks higher after increase in US retail sales; J.C. Penney jumps 9 percent

Associated Press
Worries of a Fed pullback sends stocks lower
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FILE - In this Tuesday, Nov. 19, 2013, file photo, specialists John Alatzas, left, and William Geier, right, work at their posts on the floor of the New York Stock Exchange. World stocks were dimmed Wednesday Nov. 20, 2013 by a weaker outlook for global growth. Markets also braced for the release of Fed minutes that could spark a new wave of speculation about when the central bank will reduce its monetary stimulus. (AP Photo/Richard Drew, File)

NEW YORK (AP) -- Stocks are higher on Wall Street Wednesday as investors react to a surprisingly big increase in U.S. retail sales last month and better quarterly results from J.C. Penney and other companies.

Investors were also waiting for minutes from the Federal Reserve's October policy meeting, which will be out later in the afternoon.

The Dow Jones industrial average rose 24 points, or 0.2 percent, to 15,991 as of 12:10 p.m. Eastern. The broader Standard & Poor's 500 index was up five points, or 0.3 percent, to 1,792 and the Nasdaq composite rose 17 points, or 0.4 percent, to 3,948.

J.C. Penney led the S&P 500 index higher with a 9 percent gain. Despite reporting a loss in the third quarter, there were hopeful signs for the long-struggling store chain heading into the holiday shopping season. The company said its sales rose in October for the first time since December 2011. The stock rose 77 cents to $9.48. It's still down 52 percent this year.

Lowe's, the home improvement store chain, fell $2.52, or 5 percent, to $47.91. Lowe's earned 47 cents per share in the latest quarter, a penny short of what analysts were looking for. Lowe's was outshone by competitor Home Depot, which reported a 26 percent surge in net income the day before.

The holiday shopping season is a make-or-break time for U.S. retailers, and more broadly the U.S. economy. Sales during November and December can account for up to 40 percent of the annual revenue for store operators.

So far, there's reason to be hopeful. The National Retail Federation, the nation's largest retail trade group, expects holiday sales to increase 3.9 percent to $602.1 billion this year.

Separately, the U.S. Commerce Department said Wednesday that U.S. retail sales rose 0.4 percent in October. That was much better than the 0.1 percent increase economists had predicted, according to FactSet, a financial information provider.

"Consumers seem to be in a better mood, which will be good for the overall economy," said Ron Florance, deputy chief investment officer for Wells Fargo Private Bank.

The Federal Reserve will release minutes from its October policy meeting at 2 p.m. Eastern. Investors will be looking for any clues on when the Fed might start to pull back on its economic stimulus program.

The central bank has been buying $85 billion in bonds a month in an effort to keep interest rates low and stimulate the economy by encouraging borrowing and hiring. At its October meeting the Fed voted to keep the bond-buying program intact, saying that the economy had not improved enough.

The Fed's next policy meeting is scheduled for Dec. 17-18. Investors are split on whether the bank will vote to pull back its bond purchases, or "taper" them, as it is sometimes called on Wall Street, so soon after voting to keep things as they are.

Fed Chairman Ben Bernanke "has left the door open for a December taper but is not giving a sense that the Fed is in any rush," analysts with RBS wrote in a note to investors Wednesday.

The yield on the benchmark U.S. 10-year Treasury note was basically unchanged from Tuesday at 2.71 percent.

In other company news:

Deere & Co. rose $2.41, or 3 percent, to $85.23. The farm equipment maker said it earned $806.8 million, or $2.11 per share, up from $687.6 million, or $1.75 per share, a year earlier. The results were well ahead analysts' expectations, who were looking for earnings of $1.90 per share.

Yahoo rose $1.26, or 4 percent, to $35.90, after the company announced it planned to buy an additional $5 billion of its own stock. The company has spent $3.1 billion already. Companies buy their own stock in an effort to increase the value of the remaining shares.

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