Report on Consumer Spending Gives Markets a Boost

Stocks closed higher on Wall Street Tuesday as investors reviewed solid earnings reports from retailers and an encouraging update on consumer spending. Home Depot rose 5.8% after the home improvement retailer reported surging sales and solid profits last quarter amid a hot housing market, the AP reports. New data also showed Americans sharply increased their spending last month. Technology and health care companies also rose. Communications companies lagged the market. The yield on the 10-year Treasury note rose to 1.64%. The S&P 500 index rose 18.10 points, or 0.4%, to 4,700.90 and is sitting just below the record it set on Nov. 8. The Dow Jones Industrial Average rose 54.77 points, or 0.2%, to 36,142.22. The Nasdaq rose 120.01 points, or 0.8%, to 15,973.86.

The government reported that Americans largely shrugged off higher prices last month and stepped up their spending at retail stores and online. The Commerce Department said retail sales rose 1.7% in October. That’s the biggest gain since March and up from 0.8% in the previous month. Several companies that depend on consumer spending rose. Online crafts marketplace Etsy rose 5.1%. Nike rose 1.8% while Coach and Kate Spade parent Tapestry gained 1.5%. The nation's largest retailer, Walmart, also reported solid financial results while raising its profit forecast, but the stock fell 2.5%, giving back some of the big gains it's made in the last few weeks.

Investors received another encouraging economic update from the Federal Reserve, which said industrial production rebounded in October with a 1.6% gain. The gain followed a 1.3% plunge in September. Wall Street is closely monitoring the latest economic reports for more clues as to how businesses and consumers are dealing with rising inflation. Companies have been raising prices as they face higher raw materials costs and supply chain problems. Consumers have been willing to pay the higher prices on many goods, though analysts are concerned that consumers could eventually pull back on spending because of inflation. (More stock market stories.)