Dow at 10, 157 this morning, up 13 points.
NEW YORK (AP) — Stocks rose Monday after cautious consumers
bumped up spending last month and the Supreme Court blocked a
government effort to get money from tobacco companies.
The Dow Jones industrial average rose about 50 points in midday
trading. Broader indexes also rose. Treasury prices rose, sending
interest rates lower, as overall concerns remained about the
economy.
The government said consumer spending rose 0.2 percent last month,
just above the 0.1 percent growth forecast by economists polled by
Thomson Reuters.
Growth was slow, although personal income rose 0.4 percent. A
bigger jump in income than spending means consumers are still
unsure about their financial position and choosing to save their
money. Weak spending could continue to hamper growth because
consumer spending is the biggest driver of the economy.
The tepid recovery has led some leaders around the world to push
for new spending to bolster growth. But more government spending
would make it difficult to control deficits and could drive up
borrowing costs if investors worrying about defaults demand higher
interest rates.
The G20, a group of rich and developing nations including the U.S.,
agreed over the weekend that industrialized nations would halve
deficits by 2013. But they didn’t resolve differences between those
seeking more spending and those looking for cost cuts. Leaders
said, however, that they wouldn’t pull government support too
quickly. There are concerns that the sudden drop in demand could
short circuit a global rebound.
Some European nations have been pushing for steep spending cuts to
avoid problems such as those encountered by Greece. The country
required a European Union-led bailout to avoid defaulting on its
debt. Concerns that debt problems would spread beyond Europe and
hurt a recovery have hurt stocks since late April and pounded the
euro, the currency used by 16 European countries.
Jim Swanson, chief investment strategist at MFS Investment
Management in Boston, said the latest numbers on personal spending
indicate that the recovery is proceeding but that government
policymakers need to be careful about cutting back too quickly.
“Now is the time you keep spending because you don’t want to
suddenly withdraw the caffeine that’s in the system,” Swanson
said.
Meanwhile, tobacco stocks rose after the Supreme Court said it
wouldn’t take up a case between the government and tobacco makers.
The decision prevents the government from getting billions of
dollars from makers of cigarettes for anti-smoking campaigns.
Reynolds American Inc. rose 4.2 percent, while Altria Group Inc.,
parent of Philip Morris USA, rose 3.8 percent.
A separate decision from the court signaled that gun control laws
in Chicago and a nearby suburb likely would be struck down by a
lower court. That gave a boost to shares of gun makers. Smith &
Wesson rose 4.2 percent, while Sturm, Ruger & Co. climbed 3.7
percent.
In midday trading, the Dow rose 49.27, or 0.5 percent, to
10,192.93. The broader Standard & Poor’s 500 index rose 4.79, or
0.4 percent, to 1,082.55. The Nasdaq composite index rose 15.80, or
0.7 percent, to 2,239.28.
Treasury prices rose, pushing down yields. The yield on the
benchmark 10-year Treasury note fell to 3.05 percent from 3.11
percent late Friday. Treasurys often rise when investors are
uncertain about the strength of the economy because they are stable
investments that produce modest gains.
The euro fell to $1.2332.
Crude oil fell 72 cents to $78.14 per barrel on the New York
Mercantile Exchange. A tropical storm in the Gulf of Mexico isn’t
expected to hit the oil spill.
Reynolds American rose $2.29, or 4.5 percent, to $53.66, and Altria
rose 76 cents, or 3.9 percent, to $20.46.
Smith & Wesson rose 17 cents, or 4.2 percent, to $4.27, while
Sturm, Ruger & Co. climbed 56 cents, or 3.7 percent, to $15.62.
Four stocks rose for every three that fell on the New York Stock
Exchange, where volume came to 337 million shares compared with 405
million shares traded at the same point Friday.
Britain’s FTSE 100 rose 0.5 percent, Germany’s DAX index gained 1.4
percent, and France’s CAC-40 rose 1.6 percent. Japan’s Nikkei stock
average fell 0.5 percent.
