Upbeat retail sales, drop in oil sends Russell higher
After a drop in crude oil prices and positive retail sales data caused a buying frenzy during the morning session, small caps have calmed in afternoon trading. At 2:30 p.m. ET, the Russell 2000 (NYSE:IWM) was up 6.54, or 0.91%, at 724.42.
U.S. retail sales rose 1% in May, which beat the expected rise of 0.5%. Analysts saw the jump in retail sales as a sign that American consumers were spending their $50 billion in stimulus checks. The positive sales data overshadowed a rise in unemployment claims, which climbed 25,000 to 384,000. It marked the highest point for continuing claims since February 2004. Also, the import price data hit the forecast on the nose, but it still reflected the largest three-month increase since October 1990.
The Commerce Department also said business inventories in April rose by 0.5% in April, which doubled the 0.2% jump clocked in March.
In Thursday afternoon trading, crude oil is down to $135.12 a barrel. The U.S. dollar is up against both the yen and the euro.
Further fueling the bulls was news before the opening that Belgium beer company InBev NV launched an unsolicited bid to acquire Budweiser (NYSE:BUD) for $46.4 billion, or $65 a share or a 14% premium compared with Tuesday’s closing price.
Broad market sectors on the rise this morning included restaurant services, home improvement retailers, brewers, investment services and consumer financial services. Sectors attracting sellers include non-cyclical consumer crops, gold and silver, computer hardware and water transportation.
Small caps of note today on the upside include Talbots Inc. (NYSE:TLB), which is up some 19% after the women’s apparel retailer announced that it secured a $50 million loan from its majority shareholder Aeon Co. Shuffle Master, Inc. (Nasdaq:SHFL) is surging 18% despite no news. Asta Funding, Inc. (Nasdaq:ASFI) is up 16%, also despite no announcements from the company.
On the downside, National CineMedia Inc. (Nasdaq:NCMI) is falling 25%, in the wake of earnings news. Chindex International Inc. (Nasdaq:CHDX) is off 28%, also sinking after soft quarterly results.
