Strong corporate earnings power gains on Wall Street

By Jack Healy

New York Times

Wall Street bounded ahead on Monday as investors bet that another round of strong corporate earnings would propel the markets even higher.

Better earnings by the toy maker Hasbro, coming on the heels of a stronger-than-expected retail sales report from the government, helped to strengthen hopes that people were again spending money on non-essentials as the economy healed.

Intel has said that computer sales are rebounding and sales at Apple, the maker of iPods and iPhones, topped expectations when the company reported a profit after markets closed Monday.

Nevertheless, consumer stocks helped to lead the gains throughout the day. Investors snapped up shares of department stores, hotel and entertainment companies, and of office-supply companies like Office Depot.

“The consumer does appear to be willing to spend,” said Sam Stovall, chief investment strategist at Standard & Poor’s. “They’re not totally retrenched.”

Last week, the government reported that retail sales excluding automobiles rose 0.5 percent in September, even as overall sales dipped with the end of the government’s “cash for clunkers” auto rebate program. Economists were encouraged by the gains because they came even as unemployment had risen to new highs and thousands more homeowners had fallen behind on their mortgages.

The Dow Jones industrial average, which wobbled last week after crossing 10,000, rose 96.28 points, or almost 1 percent, to close at 10,092.19 .

On a day with so few new economic figures, some analysts were perplexed by the market’s gains. Some suggested that some money was pouring over from safer reservoirs such as money-market funds as investors banked on another week of gains.

Stock indexes rose more than 1 percent last week after the big banks JPMorgan Chase and Goldman Sachs reported eye-popping profits even as Bank of America and Citigroup groaned under the weight of their consumer banking portfolios.

“It’s more of the same silliness,” said Joe Saluzzi, co-head of equity trading at Themis Trading. “I think it’s price-chasing. Price does not equal value.”