The Dow Jones index roared back above 11,000 on Tuesday, surging 136 points on the strength of better-than-expected January retail sales figures and a drop in crude oil prices below $60 a barrel.
The blue-chip index closed within reach of its 4 1/2-year high of 11,043 set Jan. 11, the last time it closed above the 11,000 mark.
The broad rally began early, after the Commerce Department said retail sales soared 2.3 percent last month, beating economists’ consensus forecast of a 0.9 percent climb and posting the biggest rise since May 2004. The report soothed fears that the U.S. economy could be headed for a slowdown, strategists said.
“That was a breath of relief for the market,” said Bruce Zaro, chief technical strategist at Delta Global Advisors in Plymouth, Mass. “The figure was much stronger than expected, taking one worry off the board.”
In active trading, the Dow Jones industrial average zoomed 136.07 points, or 1.3 percent, to 11,028.39. The broader Standard & Poor’s 500 index rallied 12.67 points, or 1 percent, to 1,275.53, and the technology-heavy Nasdaq composite index zipped 22.36 points, or 1 percent, to 2,262.17.
Gainers swamped losers by more than a 2-to-1 margin on the New York Stock Exchange and Nasdaq. The rally more than made up for Monday’s sell-off, when the Dow dropped 26 points and the Nasdaq lost 22.
Phil Dow, managing director of equity strategy at brokerage RBC Dain Rauscher in Minneapolis, said he was surprised by the strength of Tuesday’s upswing, as the robust economic data could make it harder for new Federal Reserve Chairman Ben Bernanke to signal an imminent end to interest-rate hikes when he gives his first congressional testimony today.
Treasury yields rose as traders took the retail report as a sign that two more rate hikes could be coming. The yield on the benchmark 10-year T-note rose to 4.61 percent, from 4.58 percent.
Mild winter weather and speculation about solid inventories sent crude oil futures prices tumbling $1.67 to $59.57 a barrel on the New York Mercantile Exchange, marking the third consecutive decline and the lowest close since Dec. 27. Unleaded gasoline for March delivery plunged more than 3 percent to $1.385 a gallon on the Nymex.
Heating oil and natural gas also fell, as traders predicted that a government inventory report today would show a marked increase in the U.S. stockpiles of oil, fuels and natural gas.
Energy prices have been declining steeply. Gasoline futures have fallen roughly 22 percent in the last two weeks, while crude is down roughly 13 percent and natural-gas prices are 50 percent lower than their mid-December peak, said Bob Sitko, a lead portfolio manager with USAA Private Investment Management.
