Wednesday, May 27, 2009
NEW YORK (AP) — Consumers are getting more confident about the economy, and Wall Street is tagging along.
Stocks surged Tuesday, their first big win in a week, after the Conference Board said consumer sentiment rose in May to the highest level since September. Major stock indicators jumped more than 2 percent, including the Dow Jones industrial average, which added 196 points.
The day’s gains pushed the Standard & Poor’s 500 index barely into the black for the year, and leaves the Nasdaq composite index up 11 percent in 2009. The Dow is still down 3.5 percent for the year.
The research group’s Consumer Confidence Index vaulted to 54.9 from 40.8, soaring past the 42.3 that economists surveyed by Thomson Reuters expected.
Investors watch the indicator for signs of whether consumers might start shopping more or making bigger purchases such as cars and homes. Spending by consumers makes up more than two-thirds of U.S. economic activity.
Jim King, chief investment officer at National Penn Investors Trust Co., said the improvement in consumer confidence surprised investors. With unemployment still high and expected to go higher, many market watchers thought the mood on Main Street would remain gloomy.
“The consumer confidence figure is one that no one really pinned a lot of hopes on as going higher,” he said.
Traders saw green on their screens on the first day back from a long weekend, but the compressed week could still trip up the market. Data are due on home sales as well as the economy’s overall output in the first three months of the year, and investors will be eyeing General Motors Corp. as its June 1 restructuring deadline approaches.
According to preliminary calculations, the Dow rose 196.17, or 2.4 percent, to 8,473.49. The S&P 500 index rose 23.33, or 2.6 percent, to 910.33, and the Nasdaq rose 58.42, or 3.5 percent, to 1,750.43.