US stocks rallied on Tuesday with the S&P 500 closing at its highest level in 2 -- 1 2 months, as a sales forecast by Best Buy dampened concerns that high inflation would lead to a dismal holiday shopping season, while a bounce in oil prices helped lift energy shares.
Best Buy Co Inc shot up 12.78% as the best performing stock on the S&P 500 index after the retailer forecast a smaller drop in annual sales than previously announced and expressed confidence that a ramp-up in deals and discounts will entice more customers.
The S&P 500 retail index was boosted by Best Buy's gains by 1.21%.
The retail index was capped by Dollar Tree Inc's 7.79% fall as the worst performing S&P 500 component, which capped gains for the retail index, as the discount retailer cut its annual profit forecast for the second time.
If you take the continuum of income and consumers out there, the upper half is relatively inelastic to some costs going up to some extent or another where the bottom half is going to be more sensitive, said Shawn Cruz, head of trading strategist at TD Ameritrade in Chicago.
The Dollar Trees of the world don't have much ability to pass through those costs so they are going to get hit pretty bad. The Dow Jones Industrial Average rose 397.82 points, or 1.18%, to 34,098. The S&P 500 gained 53.64 points, or 1.36%, to 4,003. 58 and the Nasdaq Composite added 149.90 points, or 1.36%, to 11,174. The S&P 500 closed at its highest level since Sept. 12.
After two sessions of declines, the energy sector climbed 3.18% as Saudi Arabia said the OPEC was sticking with output cuts, shooting down a report on Monday that said the alliance was considering increasing output, which sent crude prices sharply lower.
As investors continue to gauge the path of Federal Reserve hikes, Cleveland Fed President Loretta Mester reiterated on Tuesday that lowering inflation remains critical for the central bank, a day after supporting a smaller rate hike in December. In order to temper consumer demand and cool inflation, the central bank may need to boost interest rates to a higher level and hold them there for longer, according to Kansas City President Esther George.
On Tuesday, investors were waiting for remarks by St. Louis Fed Reserve President James Bullard ahead of the minutes from the Fed's November meeting scheduled for Wednesday.
Volume was light for the session and is likely to dwindle heading into the Thanksgiving holiday on Thursday, with the US stock market open for a half-session on Friday.
The US exchanges' volume was 9.45 billion shares, compared to the 11.75 billion average for the full session over the last 20 trading days.
Dow shares were up 2.96% after Cowen Co upgraded the drug distributor stock, citing its healthcare services business push.
Manchester United shares jumped late in the session after Sky News reported that the Glazer family, which owns the football club, was looking at financial options that could include an outright sale and closed 14.66% higher.
The application-focused solutions company posted upbeat fourth quarter revenue, which led to a 8.08% increase in Agilent Technologies Inc.
The dollar's and US Treasury yields helped support risk appetite.
Advancers were favoring advancers because of the 1.56 to 1 ratio on the NYSE, which has a 3.40 to 1 ratio and a 3.40 to 1 ratio on the NYSE.
The S&P 500 posted 24 new 52 week highs and 3 new lows, the Nasdaq Composite recorded 108 new highs and 224 new lows.