Stocks shake off 2-week slump on retail sales news

NEW YORK (AP) — Stocks are shaking off a two-week slump after retailers had better sales in May than economists were expecting.

The Dow Jones industrial average, the Standard & Poor’s 500 index and the Nasdaq composite are all on track to have their best day so far in June.

The government reported today that retail sales edged down 0.2 percent last month, the first decline in nearly a year. That was slightly better than analysts had predicted. Americans bought fewer cars during the month, but the decline reflected temporary supply chain disruptions caused by the earthquake and tsunami disaster in Japan. Excluding weak car sales, retail sales rose 0.3 percent.

“The good news is the consumer is hanging in there,” said Rob Lutts, president and chief investment officer of Cabot Money Management.

The stronger report on retail sales sent the stocks of department stores and other retailers higher. Nordstrom Inc., Home Depot Inc. and Bed Bath & Beyond Inc. all rose by about 3 percent. J.C. Penney Co. jumped 19 percent after the department store chain named Ron Johnson, the man who pioneered Apple Inc.’s retail stores, as its next CEO. The stock rose the most of any company in the S&P 500.

The government also reported that wholesale prices rose in May by the smallest amount in 10 months. That helped to allay concerns among investors that rising food and energy costs would slow the economic recovery.

The Dow Jones industrial average rose 138 points, or 1.2 percent, to 12,091 in afternoon trading.

The Standard & Poor’s 500 index rose 18, or 1.4 percent, to 1,289. The Nasdaq composite index rose 41, or 1.6 percent, to 2,681.