NEW YORK – US stocks closed higher on Tuesday, buoyed by a strong rise in November retail sales as the all-important holiday shopping season nears its peak.
The Dow Jones Industrial Average rose 47.98 points (0.42 percent) to close at 11,476.54, reaching its highest level in 27 months.
The S&P 500 index, a broader measure of the market, was up 1.13 points (0.09 percent) to 1,241.59, while the tech-rich Nasdaq rose 2.81 points (0.11 percent) to 2,627.72.
Financial stocks were the main laggards, with shares of Citigroup declining 2.5 percent and those of JPMorgan losing 1.7 percent and Bank of America declining 1.1 percent.
The tone for trade was set early in the day, when the Commerce Department released data showing US retail sales rose more than expected in November for a fifth straight month of gains.
Retail and food services sales for November rose 0.8 percent from the prior month to 378.7 billion dollars, the department said.
The increase was much better than the 0.5 percent rise expected by economists and signaled Americans were more willing to open their wallets, fueling consumer spending that makes up two-thirds of US economic activity.
"Overall, the November retail sales report was a strong report that flew in the face of the weak wage growth reported in the November employment report," said Patrick O'Hare at Briefing.com.
The data came shortly after electric appliance retailer Best Buy posted disappointing quarterly earnings, with a five percent drop in US sales, even though it included Black Friday, the day after Thanksgiving considered one of the shopping peaks of the year.
Best Buy's reported a 217 million dollar profit in the quarter ending November 27, compared with 227 million dollars in the same period last year. Its shares slumped nearly 15 percent on the news.
Later trade was choppy amid news that the Federal Reserve will maintain near-zero interest rates and its massive 600 billion dollar asset purchasing program launched last month.
The Federal Open Market Committee said the US economic recovery was chugging forward, but too slowly to reduce high unemployment rates.
"The FOMC statement made for a volatile afternoon as stocks sold off, treasuries sold off, and the dollar rallied," said analysts at briefing.com.
In other corporate news, shares of General Electric rose 0.4 percent after it forecast solid growth in 2011.
The bond market declined.
The yield on the 10-year Treasury bonds rose to 3.45 percent from 3.29 percent on Monday, while that of the 30-year bond climbed to 4.56 percent from 4.40 percent. Bond prices and yields move in opposite directions.