Maryland Daily Record Maryland's trusted source for business and legal news
NEW YORK — Maybe American consumers are better off than anyone thought.
An unexpected jump in consumer confidence and slight gains in Americans’ spending and income helped push stocks higher for the third day in a row Friday.
The Thomson Reuters/University of Michigan Consumer Sentiment index rose to 74.3 in May, above analysts’ estimates of 70. Concerns about higher gas prices and inflation knocked the gauge down in March and April.
Gas prices have come down in May after reaching nearly $4 last month, giving a lift to the closely watched measure of consumer confidence.
“That’s what a 25-cent drop in gas prices will do,” David Ader, bond strategist at CRT Capital Group, wrote in an email to clients.
That dip isn’t accounted for in the latest consumer spending figures from the Commerce Department, because its numbers lag by a month. Both personal income and spending rose 0.4 percent in April, in line with what economists expected. Higher prices for food and gas made up most of the increase in consumer spending, which practically ate up the income gains.
The Dow Jones industrial average rose 62 points, or 0.5 percent, to 12,464. The Standard & Poor’s 500 index rose 6 points, or 0.5 percent, to 1,332. The Nasdaq composite rose 15 points, or 0.5 percent, to 2,797.
Marvell Technology Group Ltd. jumped 10 percent. The maker of chips for data-storage and Blackberry’s smartphones reported a slight drop in earnings. But Marvell’s CEO forecast higher sales in the current quarter.
Another chipmaker, Broadcom Corp. rose 5 percent, the most of any stock in the S&P 500. FBR Capital Markets said Broadcom should benefit from growing demand for smartphones and put the company on its list of top picks.
CVS Caremark Corp. rose 2 percent after the pharmacy benefits company won a three-year contract from the Blue Cross Blue Shield Federal Employee Program.
All three major stock indexes remain down slightly for the week, and declined for each of the three weeks before that. Stocks took a hard fall Monday with a batch of bad news from Europe. Another downgrade of Greece’s weak credit rating, a warning on Italy’s debt and a defeat of Spain’s ruling party deepened worries about Europe’s debt crisis.
Stocks hit their highest levels of the year April 29 following a strong run of corporate earnings. The S&P 500 has lost 2.4 percent since then as Greece struggles to avoid default and U.S. economic forecasts were revised lower, partly due to high gas prices.
Trading was thin ahead of the holiday weekend. Markets will be closed Monday for Memorial Day.
