The S&P 500 and Nasdaq shook off recent pressure to move higher on Tuesday as rising crude oil prices gave the energy sector a big boost.
The S&P 500 was up 0.35%, the Dow Jones Industrial Average fell 0.12%, and the Nasdaq gained 1%.
Crude oil prices rebounded on Tuesday after days of pressure. Prices have been lower as investors remained concerned over a global supply glut. The Organization of Petroleum Exporting Countries will meet in Vienna later this month, though expectations of a production freeze agreement are mixed.
West Texas Intermediate crude was up 4% to $45.07 a barrel on Tuesday.
The energy sector was the best performer on Wall Street. Major oil producers including Exxon Mobil (XOM) , Chevron (CVX) , Royal Dutch Shell (RDS.A) and BP (BP) moved higher, while the Energy Select Sector SPDR ETF (XLE) rose 2.6%.
Retail sales climbed at a faster-than-expected pace in October as consumer appetite continued to drive the bulk of economic improvement. Retail sales last month rose by 0.8%, higher than 0.6% in September and a 0.6% growth rate analysts anticipated. Excluding gas and autos, sales increased 0.6%, double consensus estimates.
"This report exceeded expectations on all fronts and will present the data-dependent [Federal Reserve] with additional evidence to go forward with a hike in December," Robert Both, macro strategist at TD Securities, wrote in a note. "However, with markets already attaching a greater-than 90% probability of a December rate hike, this report will do little to strengthen expectations further."
An interest rate hike in December looks plausible if there isn't any significant negative economic news over the next month, Boston Fed President Eric Rosengren, a voting member of the committee, said on Tuesday morning. Rosengren voted to hold rates in November, alongside other members. The chances of a rate hike next month currently sit at 85%, according to CME Group fed funds futures.
Import and export prices in the U.S. both climbed higher than expected in October. Import prices increased 0.5% last month, according to the Bureau of Labor Statistics, higher than an expected 0.4% increase. Export prices increased 0.2%, above consensus of 0.1% growth.
Manufacturing conditions improved in the New York area in November, according to the Empire State Manufacturing Survey. The measure increased 8.3 points to 1.5, a positive reading for the first time in four months. New orders and shipments increased, while inventories fell to a multiyear low. Analysts expected the index to remain below zero.
Business inventories in the U.S. moved higher in September, led by higher sales and inventories. The Commerce Department reported a 0.1% increase in inventories over September with sales climbing 0.7% and inventories up 0.6%. Economists had expected a slightly higher 0.2% increase in inventories over the month.
The Dow closed at new records on Thursday, Friday and Monday in reaction to Donald Trump's presidential win. Financials and pharmaceutical companies, in particular, got a boost from the unexpected victory on hopes of decreased regulation. Market gains are also common at the tail-end of election years as uncertainty eases and investors shift back to market fundamentals.
Home Depot (HD) rose more than 1% after lifting its full-year earnings estimates after strong sales growth in its third quarter. The home-improvement retailer anticipates full-year earnings of $6.33 a share, higher than a previous target of $6.31. Sales are expected to rise by 6.3%. Home Depot has benefited in recent quarters from strong demand and constrained supply in the housing market.
Vodafone (VOD) was slightly lower after taking a 5 billion euro ($5.38 billion) write-down on its India business. The write-down was tied to increasing competition in the region. Vodafone reported a loss of 5 billion euros over the six months ended Sept. 30, wider than a loss of 2.3 billion euros in the year-ago period. The telecom still expects to meet its full-year goals thanks to a solid performance in Europe.
American Airlines (AAL) , Delta (DAL) , United Continental (UAL) and Southwest (LUV) each got a boost in premarket trading after Warren Buffett took an unexpected stake in the airlines. Buffett's Berkshire Hathaway (BRK.A) disclosed its $1.2 billion investment in regulatory filings on Monday evening after long being bearish on the sector.
United Continental also got a boost after outlining new strategies ahead of its Investor Day on Tuesday. The airline expects to generate $4.8 billion in additional profit per year by 2020. The third-largest U.S. airline also announced plans to defer 61 Boeing 737-700 planes due over the next two years to a later date.
Advance Auto Parts (AAP) rallied on Tuesday after posting better-than-expected earnings. The auto retailer earned an adjusted $1.73 a share, down from $1.95 a year earlier, but 2 cents above estimates. Sales fell 2% to $2.25 billion, though came in above expectations of $2.2 billion.
Hertz (HTZ) was downgraded to equal-weight from overweight at Morgan Stanley. Analysts said earnings visibility was declining.