Stocks climb after fifth straight increase in consumer spending boosts hopes for economy
Stocks rose Monday after an increase in consumer spending boosted confidence in the economy.
The Dow Jones industrial average rose about 45 points in afternoon trading. Broader indexes also climbed.
The Commerce Department said consumer spending rose for the fifth consecutive month in February, matching economists’ expectations.
Job creation and healthy consumer spending are considered keys to a sustained recovery. At the end of the week, investors will get the Labor Department’s monthly employment report, which is expected to show employers added jobs this month for only the second time since the recession began in December 2007.
Meanwhile, easing concern about debt problems in Greece reduced demand for the dollar. The dollar’s decline in turn lifted demand for commodities, which become more attractive to foreign investors when the dollar falls since most of them are priced in dollars. Energy and materials stocks including
Financial shares were mixed after the Treasury Department said it would start to sell the shares it owns in
The stock market has been climbing at a steady pace since early February on expectations that the economy is improving. Many reports still point to a weak economy but indicate that conditions are improving.
“The market seems to be holding up pretty well and probably will for a while,” said Frank Haines, chief investment officer at Christian Brothers Investment Services in New York. Haines said low interest rates will help stocks for now but that longer-term threats like uncertainty about policies in Washington and rising debt levels in the U.S. and other countries could eventually hurt markets.
In early afternoon trading, the Dow rose 44.13, or 0.4 percent, to 10,894.49. The Dow at times traded above 10,900. That put the psychological threshold of 11,000 in sight. The Dow hasn’t traded above that level since
The broader Standard & Poor’s 500 index rose 5.09, or 0.4 percent, to 1,171.68, and the
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.88 percent from 3.85 percent late Friday.
The gain in stocks and easing demand for safety of Treasurys came after the government said consumer spending rose 0.3 percent in February. The increase raised hopes that consumers are regaining confidence and will bump up spending. Consumer spending is the biggest driver of the U.S. economy.
The same report said personal income was unchanged last month. Economists had forecast growth of 0.1 percent. Weakness in personal income could be a cap on spending.
Consumer spending is tied to the job market. The Labor Department’s monthly employment report due Friday is expected to show employers added jobs for only the second month since the recession began in late 2007.
Economists predict employers added 190,000 jobs in March, though some of those jobs are tied to temporary hiring for the census. The report will come as markets are closed for Good Friday.
The market’s gain Monday followed two mixed days. On Thursday and Friday, shares rallied in the morning only to retreat to near flat levels by the closing bell when buying faded.
There was no clear reason for the retrenchment Friday, though analysts said it was expected that the market would slow after a two-month climb with few interruptions. The Dow has climbed in 17 of the past 21 days.
The dollar fell against other major currencies. Gold rose.
Crude oil rose $2.20 to $82.20 per barrel on the New York Mercantile Exchange.
Among energy companies,
Metals producer Freeport-McMoRan Copper & Gold Inc. rose $3.20, or 4 percent, to $82.37.
More than two stocks rose for every one that fell on the
The Russell 2000 index of smaller companies rose 2.28, or 0.3 percent, to 681.25.