Dow shrugs off US retail boom

SPENDING BY US consumers roared ahead in July, but Wall Street shrugged off this latest evidence that the Federal Reserve will need to cool the economy with an interest-rate rise.

The Dow Jones index was 58 points up at 10,846.06 by midday. Its strength helped shares in London gain ground; the FTSE 100 closed up nearly 139 points at 6,153.3.

The value of US retail sales rose 0.7 per cent in July, taking spending to a level 9.1 per cent higher than a year earlier. The rise during the month was more than twice as big as expected.

A surge in car sales, up by 2.3 per cent to $62.6bn (pounds 39bn), accounted for much of the rise. But, even excluding cars, sales were up by 0.3 per cent in July and 7.1 per cent year on year.

Yet the markets focused instead on a small downward revision to June's figure. The Commerce Department said sales fell by 0.2 per cent in June, rather than rising by 0.1 per cent as estimated.

Most analysts still feel interest rates will rise after the 24 August meeting of the Federal Open Markets Committee.