Posted at 10:51 a.m., Friday, May 30, 2003
Consumer sentiment helps strengthen stocks
By Adam Geller
"We have more positive economic data that's got investors heartened the economy is continuing to improve," said Stephen Massocca, president of Pacific Growth Equities. "Investors are pretty optimistic."
The Dow Jones industrial average closed up 139.08, or 1.6 percent, at 8,850.26. That reversed a decline in the Dow yesterday, when it lost nearly 82 points, halting a five-day rally. It also was the highest level seen since Dec. 2, 2002, when the blue chips finished at 8,862.57.
The broader market also finished sharply higher. The Nasdaq composite index rose 20.96, or 1.3 percent, to 1,595.91. That was the best level since May 31, 2002, when the tech-focused index closed at 1,615.73.
The Standard & Poor's 500 index gained 13.95, or 1.5 percent, to 963.59. It was the highest close since July 8, 2002, when the index stood at 976.98.
The three gauges also posted a third winning month, an achievement which hasn't happened since October-December 2001. In May, the Dow gained 4.4 percent, the Nasdaq advanced 9 percent and the S&P rose 5.1 percent.
For the week, the main gauges also finished higher, with the Dow up 2.9 percent, the Nasdaq 5.7 percent higher, and the S&P up 3.3 percent.
Today, the University of Michigan reported that its consumer sentiment index rose in May to 92.1 percent, according to Dow Jones Newswires. That is up from 86.0 percent in April, although it is lower than both a mid-month reading and the forecasts of analysts.
Meanwhile, the Purchasing Management Association of Chicago said its index of business activity rose to 52.2 in May, indicating manufacturing growth in the Midwest. Analysts said that could foreshadow an increase in the national manufacturing number, to be reported by the Institute for Supply Management on Monday.
However, the Commerce Department reported that consumer spending dipped by 0.1 percent in April. That is the largest drop since the start of the year and is a sharp reversal from March when consumers increased their spending by 0.8 percent. Economists had forecast a rise of 0.1 percent for April.
Also today, the government reported that the incomes of Americans were unchanged in April after a gain of 0.4 percent in the previous month, a sign of the weak job market.
"The market's been rallying in the face of some pretty tepid economic data over the past number of weeks and so to get some good news is definitely a positive," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. "I think people are encouraged."
Advancing issues outnumbered decliners by an 11-to-3 ratio on the New York Stock Exchange. Volume was heavy.
The Russell 2000 index, which tracks smaller company stocks, rose 8.37, or 1.9 percent, to 441.01.
Japan's Nikkei stock average rose 0.6 percent.