Dow Rises by 104 Points; S&P Closes Above 1200

NEW YORK (TheStreet) -- Stocks finished near their highs of the session Wednesday, lifted by surging retail sales figures and blockbuster earnings on the same day the Federal Reserve said economic activity picked up in most parts of the country.

The S&P 500 crossed the 1200 level for the first time since September 2008 on Wednesday, two days after the Dow Jones Industrial Average closed above the 11,000 mark since that same month. The Dow staged a triple-digit rally on the day, up 104 points, or 0.9%, to close at 11,123. The S&P 500 gained 13 points, or 1.1%, to 1211, and the Nasdaq went ahead by 39 points, or 1.6%, at 2505.

"The biggest positive factor is probably the retail sales report," said Commonfund chief economist and market strategist Michael Strauss, deeming March's 1.6% surge in retail sales "confirmation of the sustainability of this recovery."

"The economy looks to be growing at a solid clip and with no inflation pressures," he said. Earlier, the Labor Department said core consumer prices remained flat in March.

As far as interest rates are concerned, Strauss believes that low inflation buys the Federal Reserve some time to start looking at ways to reduce its balance sheet before adjusting the federal funds rate. He expects the central bank to start normalizing the discount rate as soon as the end of the month or early May and then focus on lowering its balance sheet. Higher interest rates, he says, aren't likely before the second half of the year.

"Right now the economy doesn't need an emergency fed funds rate; it could probably do fine with a more normalized rate, but low inflation rates do give them a little bit of time. Just because you're getting growth, doesn't mean you have to start panicking, and the Fed isn't panicking here," he said.

Strong earnings reports from Intel(INTC) and JPMorgan Chase (JPM) were also supporting gains across the equity market.

In an earnings preview released after the bell, UPS(UPS) said earnings jumped 33% in the first quarter helped by increasing international volumes, while revenues improved by 7%. The performance helped push the delivery firm's full-year guidance higher, which was also lifting shares higher in extended-hours trading.

Overseas, Hong Kong's Hang Seng gained 0.08%, and Japan's Nikkei advanced 0.4%. The FTSE in London added 0.7%, and the DAX in Frankfurt rose 0.8%.

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