Dow climbs on strong US retail sales report

NEW YORK (AP) — Stocks edged higher Tuesday morning after new reports on retail sales and business inventories restored some optimism about the US economy.

The Dow rose 17.64, or 0.17 percent, to close at 10,526.49.      

The Standard & Poor’s 500 index rose 0.80, or 0.07 percent, to 1,121.10, while the Nasdaq composite index rose 0.80 percent, to 2,289.77.

The gains were kept in check because of fresh concerns about Europe. German investor confidence fell sharply in September, and industrial production unexpectedly stagnated during July in the countries that use the euro.

In other signs that investors remain cautious, gold climbed to another record and Treasury prices rose, sending interest rates lower.

The Dow Jones industrial average rose 13 points in late morning trading, bouncing back from an earlier loss. If it holds onto those gains, it would be the ninth rise in the average in the past 10 days. September has been a historically poor month for stocks, but so far the market has bucked that trend. The Dow is up 5.5 percent so far this month, its best start to September since 1939.

The Commerce Department said Tuesday that retail sales rose in August at their fastest pace in five months and slightly beat forecasts. The modestly higher growth is in line with economic reports over the past two weeks indicating that the economy continues to expand, though at a sluggish pace.

Retailers like Macy’s Inc. and J.C.Penney Co. rose after the retail sales report. Electronics retailer Best Buy Co. also jumped after reporting income that easily topped forecasts and raising its full-year outlook.

Those signs of modest growth have been enough to get traders to put more money into stocks in September. However analysts caution that the gains have come amid very light volume, a sign that many investors aren’t participating in the market and may still be skeptical about how well the economy is doing.

In another encouraging sign on the economy, business inventories jumped in July by their largest amount in two years and business sales rebounded after two months of declines. The upturn followed months of weak sales as people remain worried about keeping their jobs.