Wall Street rose on a mixture of positive and negative news overnight, ignoring the latter and focusing solely on the former.
The Dow was up more than 130 points, oil rose, the Aussie dollar was approaching 94 US cents and gold hit a new record, up $US22 an ounce to above $US1,140 an ounce at one stage before easing back under that level.
The S&P 500 closed above the 1,100 point level for the first time in 13 months at 1,109 points, up 1.45% on the day.
Copper jumped sharply to $US3.13 a pound; the US dollar eased (and was the major driver for the moves among commodities) on the news of better than expected retail sales.
Traders ignored the negative, but bond markets didn’t as yields on 10 year securities fell to a low 3.34%.
Retail sales rose faster than expected, but manufacturing in and around New York fell for the first time in four months, business inventories fell to a four year low.
But Fed chairman, Ben Bernanke again warned that the US faces a long and hard recovery as unemployment persists at the current high levels for longer than will be comfortable.
General Motors lost money, saw sales slump (naturally), but said it will start repaying the government aid to the US and Canadian Governments and could repay it all by 2011.
US credit card defaults fell in September, but the number of people behind on repayments rose.
Overall, it was an unexpectedly active day for figures, speeches and reports and US investors naturally picked the ones that pleased them and ignored the nasties, starting with yet another glum forecast from the Fed chairman.
Mr Bernanke said the recovery in the US economy will be modest, with higher than desired levels of unemployment for the foreseeable future.
He said in a speech in New York that "some important headwinds — in particular, constrained bank lending and a weak jobs market– likely will prevent the expansion from being as robust as we would hope."
"Jobs are likely to remain scarce for some time, keeping households cautious about spending," he cautioned.
The latest Labor Department report showed unemployment hit 10.2% in October, the first time it has been at that level for 26 years.
"The unemployment rate likely will decline only slowly if economic growth remains moderate, as I expect," the Fed chairman said.
He also said the Fed was watching the value of the dollar and recognised it could help add to inflation as it falls. But stressed there were no inflationary pressures in the economy at the moment.
Naturally that was too gloomy for investors, who choose to the much anticipated October retail sales report to justify chasing share prices to new 2009 highs.
Retail sales rose more than expected last month as consumers bought more cars.
The US Commerce Department said total retail sales increased 1.4% last month after dropping 2.3% in September, beating market expectations for a 1% increase. Excluding cars, sales were up just 0.2%, down from a rise of 0.4% in September.
That modest rise in non-auto sales suggested consumers were still reluctant to spend heavily, but that too was ignored, along with a surprise downward revision in the September retail sales estimate to minus 2.3% from the original figure of minus 1.5%.
This cut, along with the bigger trade deficit and higher imports in September, and lower consumer spending figures, has seen US economists cut the third quarter growth figure from the first estimate of a 3.5% annual rise, to around 2.6% (or from a 0.9% rise in the quarter, back to around 0.6%).
The New York Federal Reserve Bank said its measure of New York State manufacturing activity slowed noticeably to 23.51 in November from 34.57 in October, which was a five-year high.
Activity was cut by a fall in new orders, while the employment measure dropped sharply.
And GM reported a quarterly loss overnight, but surprised by saying that stabilising sales since its bankruptcy would allow it to begin paying down $US8.1 billion in debt to the United States and Canada next month.
GM also said it expected to repay all its government debt by the end of 2011 GM is 61% owned by the US Government.
GM’s third-quarter sales dropped 26% to $US28 billion. It posted a net loss of $USA1.2 billion for the period from its July 10 bankruptcy emergence to the end of September.
Bolstered by its bailout, GM ended September with almost $US43 billion in cash compared with $US14 billion a year earlier.
The company’s global share of auto sales slipped to 11.9% in the third quarter compared with 13% in the same quarter of 2008.
In the US the "cash for clunkers" sales incentives helped lift a sagging market, but GM’s share slipped to 19.5% from 24.3% in September quarter of last year.
