A stronger-than-expected gain in housing starts and signs of stability in Europe sparked a dramatic rally today on Wall Street, where trading is lighter than usual due to the holiday season.
The S&P Retail Index shot up 2.9 percent, or 14.65 points, to 528.76 as the Dow Jones Industrial Average retook 12,000 decisively, rising 2.9 percent, or 337.32, to 12,103.58.
The gainers included Saks Inc., 7.1 percent to $9.91; Abercrombie & Fitch Co., 6.8 percent to $48.20; Macy's Inc., 4.2 percent to $31.84; Nordstrom Inc., 4.2 percent to $48.87; J.C. Penney Co. Inc., 3.6 percent to $33.44, and Michael Kors Holdings, 2.3 percent to $25.45.
U.S. housing starts last month gained 9.3 percent versus October to a seasonally adjusted rate of 685,000 — ahead of the 630,000 economists expected.
In Europe, markets were buoyed by word of improved business sentiment in Germany and a fall in the price of Spanish debt. The Confederation of British Industry also said Tuesday that retail sales volume had risen in the first two weeks of December for the first time in seven months, according to the 136 firms the organization surveyed.
The FTSE 100 in London closed up 1 percent at 5419.60, the DAX in Frankfurt finished up 3.1 percent at 5847.03, the CAC 40 in Paris gained 2.7 percent at 3055.39 and the FTSE MIB in Milan rose 2.9 percent to 14965.18.
Most fashion and luxury stocks made gains during the day. Richemont rose 3 percent at 46.33 euros, Ferragamo rose 3.4 percent at 10.18 euros and Tod’s closed up 4.5 percent at 63.75 euros.
Burberry, meanwhile, gained 1.5 percent at 11.68 pounds, on news that it is discussing a new operating structure for its fragrance and beauty licenses with Inter Parfums SA.
The euro traded at $1.30 against the dollar Tuesday, while the pound traded at $1.55.
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