US stock indexes rally following solid retail sales report

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Stocks rallied on Wall Street in afternoon trading Thursday, placing the major indexes on track for more record highs.

A batch of solid economic data injected more optimism into markets following the signing of an initial trade deal between the U.S. and China.

Consumers have been the backbone of economic growth and the government’s December report on retail sales showed that they continued spending at a healthy pace. Encouraging reports on manufacturing, weekly applications for unemployment aid and homebuilders’ confidence also helped lift the market. Investors were also weighing a mixed bag of corporate earnings.

The good economic news follows the signing of the “Phase 1” trade deal between the U.S. and China that puts the nations on a clearer path to ending their 18-month long trade war. The pact eases some sanctions on China, which has agreed to step up its purchases of U.S. farm products and other goods.

Technology companies were the clear leaders. Many of the companies stand to benefit from progress in trade relations because they are reliant on China for sales and supplies. Microsoft rose 1.2% and Cisco Systems gained 1.7%.

A mix of retailers and consumer product makers also made solid gains. Home Depot rose 1.5% and Hanesbrands gained 1.9%.

Financial companies, including banks, also rose. Morgan Stanley led the sector after reporting quarterly results that topped Wall Street’s forecasts.

Utilities and real estate companies lagged the market in another sign that investors were confidently shifting more money into riskier holdings.

The yield on the 10-year Treasury rose to 1.81% from 1.78% late Wednesday. Bond prices made a significant move lower, sending yields higher, following the encouraging retail sales report.

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