Dow rallies strongly – up 395 points

By Chuck Mikolajczak

NEW YORK, Nov 22 (Reuters) – U.S. stocks rallied on
Tuesday in light trading volume as a sales forecast by Best Buy
dampened concerns high inflation would lead to a dismal holiday
shopping season while a bounce in oil prices helped lift energy
shares.

Best Buy Co Inc shot up as the best performing stock
on the S&P 500 index, after the retailer forecast a
smaller drop in annual sales than previously announced and
expressed confidence a ramp up in deals and discounts will
entice more customers.

The gains in Best Buy helped boost the S&P 500 retail
index.

In contrast, Dollar Tree Inc tumbled as the worst
performing S&P 500 component, which also capped gains for the
retail index as the discount retailer cut its annual profit
forecast for the second time.

“If you take the continuum of income and consumers out
there, the upper half of that is relatively inelastic to some
costs going up to some extent or another where the bottom half
is going to be more sensitive,” said Shawn Cruz, head trading
strategist at TD Ameritrade in Chicago.

“So the Dollar Trees of the world really don’t have much
ability to pass through those costs so they are going to get hit
pretty bad.”

According to preliminary data, the S&P 500
gained 53.72 points, or 1.36%, to end at 4,003.66 points,
while the Nasdaq Composite gained 149.83 points, or
1.36%, to 11,174.34. The Dow Jones Industrial Average
rose 395.94 points, or 1.18%, to 34,096.22.

Also providing support was the energy sector, which climbed
after two sessions of declines as Saudi Arabia said OPEC+ was
sticking with outputs cuts, shooting down a report on Monday
that said the alliance was considering increasing output which
sent crude prices sharply lower.

As investors continue to try and gauge the path of Federal
Reserve rate hikes, Cleveland Fed President Loretta Mester
reiterated on Tuesday that lowering inflation remains critical
for the central bank, a day after supporting a smaller rate hike
in December. Kansas City President Esther George said a “calmer”
labor market that sees less churn could lower inflationary
pressures.

Investors were also awaiting remarks by St. Louis Fed
Reserve President James Bullard on Tuesday ahead of the minutes
from the Fed’s November meeting scheduled for Wednesday.

Volume was light this week and likely to dwindle heading
into the Thanksgiving holiday on Thursday, with the U.S. stock
market open for a half-session on Friday.

Dow component Walgreens Boots Alliance Inc rose
after Cowen & Co upgraded the drug distributor stock, citing its
healthcare services business push.

Manchester United shares jumped late in the session
after Sky News reported the Glazer family, which owns the
football club, was exploring financial options that could
include an outright sale.

Agilent Technologies Inc jumped after the
application-focused solutions company posted upbeat
fourth-quarter revenue.

Declines in the dollar and U.S. Treasury yields also
helped support risk appetite.
(Reporting by Chuck Mikolajczak; editing by Grant McCool)