Stocks Rise, But Investors Wonder if Consumers Are Trying To Stay Ahead of Rising Inflation

Stocks went up Tuesday on Wall Street as investors reviewed the earnings and their possible relation to rising inflation, according to the Associated Press.

A wide range of companies that rely on consumer spending led the gains on Tuesday, as Americans seemed to step up their spending at retail stores and online last month. According to The Commerce Department, retail sales rose 1.7 percent in October, the biggest gain since March and up from 0.8 percent in the previous month.

Wall Street is closely monitoring the new reports for more information on how businesses and consumers are dealing with rising inflation. Companies have been raising prices as they face higher costs for raw materials and supply chain problems. Consumers have continued to purchase even with higher prices, though analysts are concerned that consumers could eventually cut back on spending because of the inflated prices.

"That inflation story is going to be big for the next six months and we're going to have a lot of stops and starts on that as it evolves," said Mike Stritch, chief investment officer at BMO Wealth Management.

For more reporting from the Associated Press, see below.

New York Stock Exchange
Stocks went up Tuesday on Wall Street as investors reviewed the earnings and their possible relation to rising inflation. Above, pedestrians pass the New York Stock Exchange as it operates during normal business hours in the Financial District, October 13, 2021, in the Manhattan borough of New York. John Minchillo/Associated Press

Heightened concerns over inflation tripped up the broader market last week following a strong run that lasted several weeks as companies reported mostly solid earnings. The latest round of earnings is nearing its finish and the market has very few singular events or economic reports to focus on through the end of the year.

The S&P 500 rose 0.6 percent as of 2:53 p.m. Eastern. The Dow Jones Industrial Average rose 131 points, or 0.4 percent, to 36,218 and the Nasdaq rose 0.8 percent.

Technology stocks made some of the broadest gains. Chipmaker Qualcomm rose 6.6 percent.

Home Depot rose 6 percent after the home improvement retailer reported surging sales and solid profits in the third quarter amid a hot housing market. The results also lifted competitor Lowe's by 4.5 percent.

Health care companies also rose. Communications companies and makers of household goods and other consumer staples lagged the market.

Bond yields edged higher. The yield on the 10-year Treasury rose to 1.63 percent from 1.62 percent late Monday.

"It reiterates the strength of the U.S. consumer, but you have to wonder a bit as inflation expectations rise, are people rushing to get in front of that?" said Stritch.

Several companies that depend on consumer spending rose. Online crafts marketplace Etsy rose 5.3 percent. Nike rose 1.9 percent while Coach and Kate Spade parent Tapestry gained 2 percent.

The nation's largest retailer, Walmart, also reported solid financial results while raising its profit forecast, but the stock gave back some of the big gains it's made in the last few weeks.

Several other large retailers will release their latest financial results this week. Target reports its results on Wednesday and Macy's reports results on Thursday.

Investors received another encouraging economic update from the Federal Reserve, which said industrial production rebounded in October with a 1.6 percent gain. The gain followed a 1.3 percent plunge in September.