Consumer Spending Data Sends Stocks Higher
NEW YORK – Strong consumer spending and income data cheered Wall Street and pushed stocks higher Wednesday as investors found reason to be optimistic about the strength of the economy.
Depite a mediocre start to the holiday shopping season, investors were pleased with the 0.7 percent rise in consumer spending in October, a better-than-expected showing. The Commerce Department also reported an 0.6 percent rise in consumer incomes – considered a key barometer of future spending.
Lower crude oil prices also helped stocks. A barrel of light crude was quoted at $48.88, down 25 cents, on the New York Mercantile Exchange. The Energy Department was expected to release its latest fuel inventory data later in the day.
In the first hour of trading, the Dow Jones industrial average rose 75.44, or 0.7 percent, to 10,503.46.
Broader stock indicators were substantially higher. The Standard & Poor’s 500 index was up 8.01, or 0.7 percent, at 1,181.83, and the Nasdaq composite index gained 17.49, or 0.8 percent, to 2,114.30.
Wall Street awaited another key economic report, the Institute for Supply Management’s manufacturing index, due out at 10 a.m.
The dollar was once again a concern, minimizing the market’s gain. The dollar fell to a 12-year low against the British pound, while the euro continued its record-setting gains against the greenback.
Merger activity dominated company news, with Wellpoint Health Networks Inc. successfully completing its $16.5 billion merger with Anthem Inc., creating the nation’s largest health insurer. Shares of the merged company, Wellpoint Inc., had yet to begin trading.
Blockbuster Inc. rose 12 cents to $8.60 after it said it was willing to raise its takeover bid for rival video rental chain Hollywood Entertainment Corp. above its original $11.50 per share offer. Hollywood gained 33 cents to $13.02 on the news.
Dow component Pfizer Inc. climbed 42 cents to $28.19 after it said it would meet its 2004 profit targets, but stood to lose $14 billion in revenues over the next three years as patents on some of its products expire.
Cigna Inc. also issued projections for future profits, saying better-that-expected results in its health care business allowed the insurer to raise its profit targets for 2004 and 2005. Cigna surged $4.63 to $74.65.
The Russell 2000 index of smaller companies was up 3.69, or 0.6 percent, at 637.46.
Overseas, Japan’s Nikkei stock average fell 1.06 percent. In afternoon trading, Britain’s FTSE 100 was up 0.55 percent, Germany’s DAX index gained 0.63 percent, and France’s CAC-40 climbed 0.75 percent.
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