U.S. equities were solidly higher, with the Dow (DIA) posting its third-straight day of gains, getting a boost from a rise in crude oil prices, the continued retreat in the yen, and upbeat domestic data that showed small business optimism and job openings both topped forecasts. Meanwhile, news on the equity front was a mixed bag of second-tier earnings reports. Treasuries were modestly lower and the U.S. dollar ticked higher, while gold also gained ground.

The Dow Jones Industrial Average rallied 222 points (1.3%) to 17,928, the S&P 500 Index (SPY) jumped 26 points (1.3%) to 2,084, and the Nasdaq Composite was 60 points (1.3%) higher at 4,810. In moderate volume, 841 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil rose $1.22 to $44.66 per barrel, wholesale gasoline gained $0.05 to $1.49 per gallon, and the Bloomberg gold spot price added $2.98 to $1,266.86 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% higher at 94.29. 

Gap Inc. (GPS $19) reported an April same-store sales drop of 7.0% year-over-year (y/y), versus the FactSet estimate of a 1.6% gain. Sales at its Gap, Banana Republic and Old Navy units all declined. The company also issued much softer-than-expected 1Q earnings-per-share (EPS) guidance. Separately, GPS announced that it will take steps to better position the company for improved business performance, and that it is evaluating its Banana Republic and Old Navy fleets, primarily outside of North America. Shares were sharply lower. 

Hertz Global Holdings Inc. (HTZ $9) announced a 1Q loss ex-items of $0.12 per share, compared to the $0.01 per share shortfall that was expected, with revenues declining 6.0% y/y to $2.3 billion, below the projected $2.4 billion. HTZ reaffirmed its full-year guidance. Shares finished higher. 

Shares of SolarCity Corp. (SCTY $18) tumbled over 20% after posting a 1Q loss of $2.56 per share, wider than the $2.31 shortfall that was estimated, as revenues rose 81.6% y/y to $123 million, versus the forecasted $110.0 million forecast. SCTY projected a much larger-than-expected 2Q loss. 

Small business optimism improves more than expected and job openings top forecasts

The National Federation of Independent Business (NFIB) Small Business Optimism Index for April rose to 93.6 from March’s 92.6 level, and versus the Bloomberg forecast calling for a slight increase to 93.0. 

Wholesale inventories (chart) ticked 0.1% higher month-over-month (m/m) in March, in line with forecasts, and compared to February’s downwardly revised 0.6% decline. Sales rose 0.7% m/m, compared to the 0.5% increase that was expected, and the inventory-to-sales ratio—the amount of time it would take to deplete inventories at the current sales pace—remained at February’s 1.36 months level. 

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), a measure of unmet demand for labor, showed 5.76 million jobs were available to be filled in March, versus forecasts of 5.45 and compared to the upwardly revised 5.61 million openings in February. 

Treasuries finished slightly lower, as the yield on the 2-year note rose 2 basis points (bps) to 0.73%, the yield on the 10-year note ticked 1 bp higher to 1.76%, while the 30-year bond rate was flat at 2.61%.