Wall St soars after retail sales fall

The Dow Jones Industrial Average shot past 7,600 and 7,700 yesterday to close up 135.6 points at 7,711.5, a new high. Stocks were boosted by a rally in the bond market after retail sales in the US fell an unexpected 0.1 per cent in May and the figure for April was revised downward to a 0.9 per cent decline. According to economists, the figures provided strong arguments against the Federal Reserve raising interest rates at its meeting on 1 July. The decline in May sales contrasted with the consensus forecast of a 0.4 per cent increase, while the revised April figure was way down from a preliminary reading of a 0.3 per cent drop.

One analyst said: "These new numbers represent a very significant slowdown in consumer spending in the second quarter, particularly that very strongly pronounced revision to the April data. This contrasts very strongly with a very robust first quarter." David Resler, chief economist at Nomura Securities, said that, with the inclusion of the new data, there had now been three successive months of negative monthly US retail sales figures. "These new numbers will make it next to impossible for the Fed to tighten monetary policy," he said.