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Stocks rise after increase in consumer spending
Source: Agencies |
March 30, 2010, Tuesday
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AMERICANS are more willing to spend, and that's making investors more optimistic about the economy.
The Dow Jones industrial average rose 46 points yesterday and broader indexes also climbed after the Commerce Department said consumer spending rose for the fifth straight month in February. The 0.3 percent gain was in line with economists' expectations and raised hopes that the biggest driver of the economy is continuing to rebound.
Job creation and solid consumer spending are considered crucial to a sustained recovery. At the end of the week, investors will get the Labor Department's monthly employment report. Analysts predict that employers added jobs in March 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 drop in turn lifted demand for commodities, which become more attractive to foreign investors when the dollar falls because most of them are priced in dollars. Energy and materials stocks including Exxon Mobil Corp. and Alcoa Inc. were among the day's biggest gainers.
The debt-strapped Greek government raised US$6.74 billion yesterday by issuing seven-year bonds. The country's ability to borrow is an important sign of confidence after European leaders and the International Monetary Fund last week agreed to provide a financial safety net for Greece and other countries that use the euro if they couldn't issue debt.
Financial shares were mixed after the Treasury Department said it would start to sell the shares it owns in Citigroup Inc. The government took 7.7 billion Citigroup shares in exchange for US$25 billion it gave the bank during the 2008 credit crisis. The planned sale during the next year could result in a profit of more than US$7.5 billion.
The advance yesterday extended a run of incremental gains since early February on expectations that the economy is improving.
"It's more of a slow steady grind higher," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.
The Dow rose 45.50, or 0.4 percent, to 10,895.86. The Dow is at its highest level since September 2008 and closer to the psychological threshold of 11,000.
The broader Standard & Poor's 500 index rose 6.63, or 0.6 percent, to 1,173.22, and the Nasdaq composite index rose 9.23, or 0.4 percent, to 2,404.36.
Bond prices mostly fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.87 percent from 3.85 percent late Friday.
The Dow is up 894 points, or 8.9 percent, since its recent closing low on Feb. 4. Some analysts say the modest pace of the advance is a sign the market isn't getting ahead of itself by bursting higher.
"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.
Investors will be looking to the Labor Department's March employment report due Friday. The stock market will be closed for Good Friday.
Economists predict employers added 190,000 jobs. Temporary hiring for the census is expected to help the numbers.
The market's gain 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. The Dow has climbed in 18 of the past 22 days.
The dollar fell against other major currencies. Gold rose.
Shares of Citigroup fell 13 cents, or 3 percent, to US$4.18.
Exxon Mobil rose 76 cents to US$67.30, while aluminum-producer Alcoa rose 17 cents to US$14.44.
More than two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 944.9 million shares compared with 1 billion Friday. Trading volume was light ahead of the start of Passover.
The Russell 2000 index of smaller companies rose 3.28, or 0.5 percent, to 682.25.
The Dow Jones industrial average rose 46 points yesterday and broader indexes also climbed after the Commerce Department said consumer spending rose for the fifth straight month in February. The 0.3 percent gain was in line with economists' expectations and raised hopes that the biggest driver of the economy is continuing to rebound.
Job creation and solid consumer spending are considered crucial to a sustained recovery. At the end of the week, investors will get the Labor Department's monthly employment report. Analysts predict that employers added jobs in March 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 drop in turn lifted demand for commodities, which become more attractive to foreign investors when the dollar falls because most of them are priced in dollars. Energy and materials stocks including Exxon Mobil Corp. and Alcoa Inc. were among the day's biggest gainers.
The debt-strapped Greek government raised US$6.74 billion yesterday by issuing seven-year bonds. The country's ability to borrow is an important sign of confidence after European leaders and the International Monetary Fund last week agreed to provide a financial safety net for Greece and other countries that use the euro if they couldn't issue debt.
Financial shares were mixed after the Treasury Department said it would start to sell the shares it owns in Citigroup Inc. The government took 7.7 billion Citigroup shares in exchange for US$25 billion it gave the bank during the 2008 credit crisis. The planned sale during the next year could result in a profit of more than US$7.5 billion.
The advance yesterday extended a run of incremental gains since early February on expectations that the economy is improving.
"It's more of a slow steady grind higher," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.
The Dow rose 45.50, or 0.4 percent, to 10,895.86. The Dow is at its highest level since September 2008 and closer to the psychological threshold of 11,000.
The broader Standard & Poor's 500 index rose 6.63, or 0.6 percent, to 1,173.22, and the Nasdaq composite index rose 9.23, or 0.4 percent, to 2,404.36.
Bond prices mostly fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.87 percent from 3.85 percent late Friday.
The Dow is up 894 points, or 8.9 percent, since its recent closing low on Feb. 4. Some analysts say the modest pace of the advance is a sign the market isn't getting ahead of itself by bursting higher.
"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.
Investors will be looking to the Labor Department's March employment report due Friday. The stock market will be closed for Good Friday.
Economists predict employers added 190,000 jobs. Temporary hiring for the census is expected to help the numbers.
The market's gain 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. The Dow has climbed in 18 of the past 22 days.
The dollar fell against other major currencies. Gold rose.
Shares of Citigroup fell 13 cents, or 3 percent, to US$4.18.
Exxon Mobil rose 76 cents to US$67.30, while aluminum-producer Alcoa rose 17 cents to US$14.44.
More than two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 944.9 million shares compared with 1 billion Friday. Trading volume was light ahead of the start of Passover.
The Russell 2000 index of smaller companies rose 3.28, or 0.5 percent, to 682.25.
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