US open: Stocks rally as consumer spending rises more-than-expected

US stocks rallied as data revealed a rise in consumer spending, which bolstered expectations of a December rate hike by the Federal Reserve, while the market largely shrugging off the FBI’s second probe into Hillary Clinton’s emails.

Dow Jones Industrial Average rose 0.06% at 18,172.82 points, S&P 500 increased 0.14% to 2,129.38 points and the Nasdaq grew 0.13% to 5,196.96 points at 1457 GMT.

Colin Cieszynski, chief market analyst at CMC Markets, said: “Stock markets in the US have been trading near all-time highs in recent months while the dollar has been rising in recent weeks, suggesting a lot of confidence that Hillary Clinton will win the election, the Fed will raise interest rates in December and that business/politics will essentially continue on as usual. A low VIX under 15 suggests little fear and a lot of complacency out there.

“This is similar to the market conditions that prevailed in the UK just before the Brexit referendum and makes me nervous because the markets could once again be dead wrong and in for a big surprise.”

The Commerce Department said consumer spending rose as inflation increased steadily, with it rising 0.5% after a downwardly revised 0.1% fall in August.

Over the 12 months to September, the core personal consumption expenditure, which is the Fed’s preferred measure of inflation, increased 1.7% after a similar increase in August, but below the 2% target.

It is anticipated that the Fed will raise interest rates in December instead of at the two-day meeting that is to kick-off on Tuesday.

In contrast, the Chicago purchasing manager’s index for October fell more than expected to 50.6 from 54.2 the previous month, below the forecast consensus of 54.

Meanwhile, oil prices weakened after producers from outside of OPEC made no commitment to join the cartel in curbing output to prop up prices during a meeting in Vienna on Saturday.

Brent crude dropped 2.28% to $48.60 per barrel and West Texas Intermediate crude fell 1.77% to $47.85 per barrel at 1411 GMT.

Naeem Aslam, chief market analyst at ThinkMarkets, said: “While traders are now attentive at the next OPEC meeting, which is nearly a month away, big money has changed its direction. According to the Commodity Futures Trading Commission data, big money is bearish once again on oil as swing producers continue to produce mixed signals in the market.

“While oil prices are tumbling, short positions in the week ended 25 October increased. OPEC officials are still trying to assure the market that they have the ability to form a solution, but the market does not believe a word they are saying and pushing oil prices lower.”

In corporate news, shares in General Electric rose 0.33% after it announced a deal to combine its oil and gas business with Baker Hughes.

Level 3 Communications gained 4.66% after the communications services said it is to be taken over local telephone service provider CenturyLink for $25bn.