Dow rises 165 on investor faith

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Associated Press

NEW YORK — Wall Street got the economic and earnings news today that it's been so desperate to hear, and stocks responded by barreling higher, lifting the Dow Jones industrials more than 160 points.

Encouraging consumer spending and income figures and better-than-expected earnings from McDonald's fed the market's rebounding confidence.

"We have had a tough economic situation and earnings have been challenging, but companies have done a good job of cutting costs. And, now it seems like the tide has turned," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif.

The Dow closed up 165.26, or 2 percent, at 8,471.61, according to preliminary calculations, having declined 0.4 percent last week. The gain wiped out much of the 209.31 the Dow forfeited last week. And, it was the Dow's biggest advance since April 2, when the blue chips shot up 215.20.

The broader market was also higher for the first time in three sessions. The Nasdaq composite index rose 27.70, or 1.9 percent, to 1,462.24. The Standard & Poor's 500 index advanced 16.03, or 1.8 percent, to 914.84.

Analysts say investors are feeling more confident now that the war in Iraq is winding down and companies' first-quarter earnings have generally been better than expected.

"Investors are hoping that some of the things we have been saying are right, and that is (that) the stall in the economy and the market in the past couple of months was due to the uncertainty created by the war," said Joseph Keating, chief investment officer at AmSouth Asset Management in Birmingham, Ala. "There is a very good chance the economy will do better in the second half of the year and going into 2004."

Today's economic news was upbeat, with the Commerce Department reporting that consumers boosted their spending by 0.4 percent in March, the biggest gain this year, as worries about the Iraq war lessened. It marked the strongest monthly increase since a 1.1 percent surge last December.

The department also reported that Americans' incomes in March increased by 0.4 percent, double the 0.2 percent increase of February.

Both readings were an improvement over the recent past, but economists said a sustained rebound in incomes and spending won't happen until the U.S. employment picture improves.

Among Wall Street's gainers, Dow industrial McDonald's rose $1.12 to $16.93 on first-quarter profits that beat analysts' expectations by a penny a share.

Advancing issues outnumbered decliners 3 to 1 on the New York Stock Exchange. Volume was very light. The Russell 2000 index rose 6.70, or 1.7 percent, to 395.20.

In Europe, France's CAC-40 rose 2.9 percent, Britain's FTSE 100 advanced 1.8 percent and Germany's DAX index climbed 4.1 percent.