Wall St gains as Fed pressure eases

Specialist Michael Pistillo, foreground, work with traders at his post on the floor of the New York Stock Exchange. File photo / AP

Wall Street gained overnight after a surprise drop in US retail sales bolstered hope that Federal Reserve policy makers might not be in a rush to raise interest rates after all.

A Commerce Department report showed that retail sales dropped 0.6 per cent in February, following an 0.8 per cent slide in January and a 0.9 per cent decrease in December.

"This report points to a surprisingly bigger weather impact on spending activity than previously thought," Millan Mulraine, deputy chief economist at TD Securities in the New York, told Reuters. "The weakness in spending could potentially complicate the case for a mid-year hike by the hawkish members of the Fed."

Indeed, the US dollar halted its advance, moving lower against both the euro and the yen.

The Federal Open Market Committee is set to begin its next two-day meeting on March 17.

In afternoon trading on Wall Street, the Dow Jones Industrial Average rallied 1.1 per cent, the Standard & Poor's 500 Index climbed 1 per cent, while the Nasdaq Composite Index advanced 0.6 per cent.

"I think this is a question of the bad news is good news, which is a reversal of what we had Friday when we got killed," Donald Selkin, the chief market strategist at New York-based National Securities, which oversees $3 billion, told Bloomberg. "The only reason it's good is in policy because it throws a wet blanket over the surety of them raising rates."

To be sure, the US labour market continues to show fresh signs of improvement. A Labor Department report showed that the number of Americans filing for unemployment benefits dropped 36,000 to 289,000 last week. The decline was larger than expected.

Gains in shares of Walt Disney and those of Goldman Sachs, last up 3.2 per cent and 2.4 per cent respectively, helped propel the Dow higher. Shares of Intel and those of Microsoft bucked the trend, last trading 3.9 per cent and 1.7 per cent lower respectively.

Intel dropped after the company downgraded its expectations for first-quarter revenue.

"The change in revenue outlook is a result of weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain," Intel said in a statement.

In Europe, the Stoxx 600 Index finished the session slightly lower from the previous close, which was the highest level in seven years, and ended the day at 395.36. Germany's DAX slipped 0.1 per cent, while France's CAC 40 Index fell 0.2 per cent.

The UK's FTSE 100 Index gained 0.6 per cent.

In good news for Greece, the European Central Bank increased the maximum Emergency Liquidity Assistance that Greek banks can get from their national central bank by 600 million euros (US$637 million), Bloomberg reported, citing two people familiar with the decision.