Investing.com — U.S. stock markets opened higher on Friday, lifted by a much stronger-than-expected report for retail sales in September that reassured market participants that consumer spending, the motor of the economy, is still holding up despite sustained high levels of layoffs and unemployment.
Earlier, the Commerce Department said that core retail rales rose by 1.5% in September from August, three times the 0.5% increase forecast ahead of time. The numbers outweighed a less positive update from U.S. factories industrial production fell by 0.6% in the month, rather than the 0.5% increase expected. While much of that was due to a bigger-than-usual drop in utility output of power as summer demand for air-conditioning tapered off, capacity utilization and manufacturing output also dropped.
However, analysts at ING noted that the retail sales numbers, too, may have been distorted, in as much as August’s numbers didn’t have the usual ‘back to school’ surge in clothing and department store expenditures. The pandemic this year has disrupted the seasonal patterns behind many high-frequency economic indicators, closing down factories that would normally be open and forcing consumers to change the way they spend their money and when they spend it.
“There is clearly momentum behind spending,” ING’s chief international economist James Knightley said in a note to clients, with a nod to the sustained strength of personal income thanks to extensive government support for the newly-unemployed. “However,” he added, “uncertainty about Covid-19, particularly the fear that European-style containment measures could eventually return to parts of the US, may mean fewer upside surprises in coming months.”
Bank stocks remained under pressure at the end of a week when