Stocks gain on US consumer data

Reports on sentiment and spending top estimates. Apple shares slide. Finance ministers agree to bolster the eurozone's debt crisis firewall. Gold and oil gain.

By TheStreet Staff Mar 30, 2012 7:37AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock)By Andrea Tse

 

Updated at 1:01 p.m. ET

 

Stocks were rising Friday as investors weighed improvements in consumer spending and an agreement to boost the eurozone's rescue fund against weakness in the tech sector.

 

The Dow Jones Industrial Average ($INDU) was rising 52.7 points at 13,198. The S&P 500 ($INX) was rising 4.9 points at 1,408 and the Nasdaq ($COMPX) was adding 1.7 points at 3,096.

 

With the first quarter coming to an end, the stock market is headed for its best first quarter since 1998. The S&P, which has increased 12% so far this quarter, has only seen double digit first-quarter gains eleven times since 1928.

 

In U.S. economic news, the Commerce Department said personal incomes rose 0.2% in February, falling short of expectations for a 0.4% increase. Personal spending rose 0.8%, topping forecasts for 0.6%.

 

"As we already had the monthly employment report, we knew that earnings and hours rose in February, suggesting a healthy enough gain for wages and salaries," says Dan Greenhaus, strategist with BTIG. "While people are making more money, they aren't receiving less support from the government. This has no doubt been a boost to consumption."

 

The Federal Reserve Bank of Chicago's purchasing managers index came in at 62.2 in March, less than the 63 expected and the previous month’s figure of 64.

 

The University of Michigan's survey of consumer sentiment reached its highest level in more than a year in March, rising to 76.2 from 75.3 in February. Economists had expected the index to come in at 74.7.

 

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Eurozone finance ministers have agreed to strengthen the single-currency bloc's debt crisis firewall to about 800 billion euros ($1.1 trillion), said Austrian Finance Minister Maria Fekter, before a meeting of European finance ministers in Copenhagen. While the eurozone seeks to protect Italy and Spain from the pains of the debt crisis, eurozone leaders have agreed on the lowest figure accepted by nations including Germany, Finland and the Netherlands, where the public has frowned upon additional funding for bailouts.

 

Some 500 billion euros of that money would come from the permanent, European Stability Mechanism when it becomes available in July, and 200 billion euros is coming through the European Financial Stability Facility. A further 53 billion euros will be derived from bilateral loans that have been made available to Greece and 49 billion euros from the European Financial Stability Mechanism. 

 

London's FTSE finished with a 0.46% gain and Germany's DAX added 1.04%. In Asia, Japan's Nikkei Average closed down 0.3% and Hong Kong's Hang Seng index finished lower by 0.3%.

 

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In corporate news, Research In Motion (RIMM), the troubled BlackBerry maker, missed fourth-quarter analysts' expectations, said it would no longer provide quarterly forecasts, and announced former co-CEO Jim Balsillie is resigning from the board. RIM posted fiscal fourth-quarter non-GAAP earnings of 80 cents a share on revenue of $4.2 billion. Analysts were expecting profit of 81 cents a share on revenue of $4.5 billion.

 

Dunkin’ Brands Group (DNKN), the owner of Dukin’ Donuts and Baskin-Robbins, announced a public offering of 26.4 million shares of common stock at $29.50 a share. There will also be a 30-day option to sell an additional 3.96 million shares from some of the stockholders selling.

 

A labor advocacy group released the findings of an audit of working conditions at Foxconn, a major Apple (AAPL) supplier in China. Apple CEO Tim Cook visited a Foxconn facility in China on Thursday, and Foxconn reportedly has promised to make improvements, but it's not clear how this may or may not impact the company's relationship with Apple, which is part of the Fair Labor Association that conducted the audit.

 

May oil futures were rising 50 cents to $103.28 a barrel, while June gold futures were adding $9 to $1,663.90 an ounce.

 

The benchmark 10-year Treasury was rising 4/32, diluting the yield to 2.152%, while the U.S. dollar index was down 0.29% to $78.958.

167Comments
Mar 30, 2012 9:25AM
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There are two sides to the healthcare issue but they don't seem to be two sides of the same thing.  One can agree that affordable health care should be available to all and that personal freedoms should not be infringed upon by the US government.  (both sides as far as I can tell). The main differences I can see are the ones of personal freedom and the ones of social contract. The US people don't want to be told what to do but they want to provide for those less fortunate who can't afford minimal health care. 
Add to this that the issue is being decided by those who have the least at stake (Congress and the Supreme Court as well as the President all have the best health care programs money can buy).
Unfortunately I can see the Supreme court passing this problem back to congress without a resolution and you already know how good a job they are doing.
While I don't have a solution to this problem I am also not being paid $175 K plus and outrageous perks to come up with a solution, but there are those who are.
Past evidence indicates that those in Washington will fail again, but things can change - can't they?
Mar 30, 2012 9:56AM
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Any elected Politician, anywhere and any office....Local to the top POTUS.....

 

Should be limited to not more then 20 years in office total...All positions.

 

Then come home or go home.........To live off the "same" benefits that all Americans live off.

 

Pensions adjusted to income, health plans averaged, Soc. Sec. and Medicare.

 

Then and only then, will they strive to better the working and retirement lives of Americans.

BECAUSE they will be partaking of the same system.....Same for Public employees..But no 20yrs. and out.........

Mar 30, 2012 10:00AM
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As far as health care, what is the ultimate goal?  There are between 10 million and 40 million with no health insurance.  Some so choose, others cannot afford the premiums.  All have access via ER, but this is not the best solution, as well all agree. If the main issue to access is cost, the 2700 pages our wonderful congress has put forth and passed (against the will of most of the populace - giving birth to the tea party I might add) will not lower the cost or solve the problem.

 

The medical delivery system has been turned upside down to the point that market forces are not allowed to function.  No one knows the cost of any treatment anymore so there is no competition for services.  Insurance does not cover plastic surgeries causing Doctors to compete and the prices have come down to where (prior to the recession) there exists a thriving market.

Mar 30, 2012 10:11AM
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Salary of retired US Presidents .............$180,00​0 FOR LIFE

Salary of House/Senate ....................​..........$174,000 FOR LIFE

Salary of Speaker of the House .............$223,50​0 FOR LIFE

Salary of Majority/Minority Leaders ...$193,400 FOR LIFE

Average Salary of a teacher .................. $40,065

Average Salary of Soldier deployed in Afghanistan .......... $38,000

Mar 30, 2012 9:39AM
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There is a downside to term limits - politicians can become dangerous creatures if they have nothing to lose and no re-election to worry about

 

The whole point of term limits WITH OUT ANY RETIREMENT BENEFITS is to insure that these legislators know they have to come home to live and work in the same environment THEY CREATE FOR THE REST OF US.

 

And how could they be more dangerous than they are now.....they ARE laying, very rapidly, the ground work for the economic COLLAPSE of the United States.  Pretty hard to be MORE dangerous than that.

Mar 30, 2012 10:46AM
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There is no confidence in this market it is not to be trusted ! Do you know where your investment $$ money is this morning ?? If not ask Jon Corzine or Bernie Madoff !
Mar 30, 2012 8:37AM
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WHAT IS YOUR SOLUTION TO CREATING JOBS, ENDING THE RECESSION, FIXING HEALTHCARE FOR THE UNINSURED AND REDUCING WELFARE, POVERTY AND HUNGER HERE IN THE US?

 

1. Eliminate ALL TAXES on income from every source and all fees, exices taxes, etc. and institute "THE FAIR TAX".  (read about it). 

2. Pass "TERM LIMITS" with NO BENIFITS for all congressmen and senators.

3. Balance the budget imediatlely......

    A. End ALL foreign aid

    B. End ALL subsidies.....ALL of them,  Corporate, personal, agricultual....ALL of them

    C. Bring home ALL American troops from around the world.....NOW.  Let the rest of the world defend itself.....and make sure we are SO STRONG nobody dares provok us and if they do let THEM pay a horrible price for it.....NOT US.

     D. Eliminate the EPA. Dept. of education, Dept. of energy, and EVERY duplicated agency!

     E. Then cut whatever percentage it takes from EVERY federal agency to bring out go 10% below income and use the difference to PAY DOWN ON THE DEBT.

4. Pass "looser pays" tort reform.

 

These reforms would free up euntripenureal energy, create millions of jobs, and bring great POTENTIAL PROPERTY to any able bodied man or woman.  Potential because there will still be those who CHOOSE to look for that "something for nothing" life style.  Liberal or conservative ideas will NOT help the un help-able.  But there WILL be more wealth to share with the TRULEY unfortunate people the were born with, or put in situations beyond their control and need help.

Mar 30, 2012 10:31AM
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Of course there are the results of money creation.  It is called inflation.  In 1976 a new car was 6,000, today it is 24,000 or 400% more.   Printing money devalues savings.  It punishes savers and  rewards debtors. 

 

Last year M2 increased 10.7%.  So far this year its up 2.7%, and over  the last 3 years it has increased 34%.  If you create 34% more dollars in 3 years that means REAL inflation is running at 11% a year.  It may take time to show up in the market, but it will.   Some say the Fed can reduce the money in circulation, but they never have. 

 

In short, in such an environment don't be invested  in bonds, CD's or cash.  Buy Specie, Stocks or even land/real estate.   Being in debt to buy commodities makes a lot of sense also, if interest rates remain low.

 

Prices of most items have gone up regardless of what the Fed says.  Visit Home Depot, Best Buy, your local gas station, or any food store... 

 

People need to demand at least 11% interest just to keep from being devalued out of their savings.  This is why gold continues to saty north of $1600/oz.   Even real estate will come back in a hyper-inflationary environment.   But it's true value will be in inflated dollars.

 

 

Mar 30, 2012 10:40AM
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Steve - how dare you even remotely suggest that teachers aren't the hardest working, most under-compensated, most under-appreciated, most under-valued members of society.  Their job is so unbelievably difficult and they work such long hours and their jobs is so unbelievably stressful - they deserve 300 days off per year, instead of the measly 175 they get now.  They also deserve the very best medical care possible, and shouldn't have to pay for any of it.  And if their annual pension benefits aren't equal to at least 200% of their salary, they should be.  Those poor teachers - they are barely one step above slave labor.
Mar 30, 2012 9:56AM
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Some 500 billion euros of that money would come from the permanent, European Stability Mechanism when it becomes available in July, and 200 billion euros is coming through the European Financial Stability Facility. A further 53 billion euros will be derived from bilateral loans that have been made available to Greece and 49 billion euros from the European Financial Stability Mechanism.
Sounds like borrowing from Peter to pay Paul as fast as possible because he caught you diddling his sister in Peter's mom's house, on the bed that she borrowed from Paul's dad, who's now serving time after robbing Peter's uncle, who loaned money to Paul's grandfather, who served in the war with Peter's mom's 2nd cousin, who borrowed money to buy a canoe rental business from Paul's great aunt, who had a secret lesbian affair with Peter's grandmother-in-law on the Titanic before it sank....
Mar 30, 2012 10:44AM
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Understand, that the average teacher works 8.5 months a year and if you pro-rate that salary, they actually earn 56,562...   In Chicago, where the graduation rate is under 70%, the average is considerably higher (over  64K).   The pro-rated  pays is over 80K.

 

Teachers as a group are not underpaid considering that the average worker in the US makes considerably less...

Mar 30, 2012 10:35AM
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trouble is most people are rather stupid (look at TV show ratings - who ARE these people?!?!?!?!). 

 

trouble too is these stupid people vote.  they don't know the why's and how's of inflation, they just say "hey - my house value is back!"  and are totally happy with that! 

 

 Even real estate will come back in a hyper-inflationary environment.   But it's true value will be in inflated dollars.
Mar 30, 2012 10:45AM
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Do you think possibly PI rose in February because of income tax returns?  We all know that personal spending rose because of the increased cost of gasoline and food. Consumer Sentiment index is based on spending and we all spent more on gas.  And yes, the consumer is back to tapping the savings account and using up what little credt he or she managed to rebuild from 2008. 

 

The unemployment numbers always get adjusted upward  after each initial report and the jobs on the market are paying less than 2008. In many cases the jobs created are minimum wage and those who have exhausted their unemployment benefits either take the minimum wage jobs or go without any income.

 

 

 

 

Mar 30, 2012 8:19AM
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"U.S. stock futures were signaling a rebound at the open as eurozone finance leaders discussed ramping up the size of the eurozone's rescue funds and the market anticipated data indicating stronger spending by American consumers in February."

 

So here we go again...the market will go up today because Europe will take a page from the USA "Financial Playbook" and will pump a bunch of freshly minted money into their system to keep their market artificially hyped up.  Then there is the "anticipated" data that Americans had strong spending in February.  Just more hype considering the retail spending data includes gas prices which have risen by around 10% if not more and the price of other goods including food are up an average of 30%.  Wal-Mart sales are flat at best, SEARS sales are down and they are closing over 100 stores, Best Buy sales are down and they are closing stores etc. etc. so don't believe the hype and manipulated numbers.  But of course this market could care less about facts or fiction so the market will probably "soar" today on the good news!!  Same old propaganda.

Mar 30, 2012 9:54AM
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Run the printing presses that is always good news. The market goes up on everything--good news and bad news, no fundamentals at all, any other industry or business tried this and they would not last 5 minutes.
Mar 30, 2012 11:29AM
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"The University of Michigan's survey of consumer sentiment reached its highest level in more than a year in March, coming in at an inde level of 76.2 from 75.3 in February. Economists expected the index to come in at 74.7."

 

This survey began back in the 1950's by a professor at the University of Michigan.  Basically, they do a random telephone survey to 500 people throughout the USA.  So before I would get too excited over this just look at how it is conducted, the methodology etc. as it is not a true representation of what the real consumer sentiment is in this country.  The only thing worse would be if the 500 people they surveyed all worked on Wall St or were part of the 1 %'ers and of course they would all say things are great.  Just more propaganda. 

Mar 30, 2012 11:08AM
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 The reason people buy stocks of course is because they anticipate the company being profitable and paying them part of their share through a dividend.  How many people actually buy a stock for this reason?  I suggest the market changed most significantly to a speculator market under Clinton in the mid  90's.   Since then haven't fraud and thievery in the markets become rampant?   When the government lies to it's citizens then lying is taken as a given for acceptable behavior.  I can't say anything positive will happen as long as the politicians continue to hide the truth form its citizens.  Obama obviously has a hidden energy agenda as well as a hidden trade agenda.  If you are an experienced leader you understand to elicit committed support you need to be honest and forthright with your corp. Telling folks honestly what to expect  is one of the most basic and fundamental foundation for good leadership.  Lying, misleading, and hiding from your corp is very dysfunctional and results in very a poor success rate.  Ya think you operate well when lied to? Ya think anyone else does? And why would an honest  hardworking leader lie?  And of course the biggest lie in the market is that you should buy for the stock appreciation.  Dividends are the long lasting lifeblood of sound investing.  Buy for the dividend and many healthy events will follow.  IMHO
Mar 30, 2012 10:45AM
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It still seems to be the good old boys are still buying and selling the market.  The average guy is still out.  The volume has never been so low.  As with all pyramid schemes you need new buyers.
Mar 30, 2012 12:28PM
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Jarlaxle,

 

Maybe cause my first boss was such a pr**k.   I decided then and there I was going to start my own business and compete against him.   I did.  I got my grub stake to do that by going into the army, and saving my pay, and when I got out, I presented a business plan to a banker that basically laughed at me.  Rather than get mad I asked him for advice.  He was a wealth of knowledege.  When I tired 18 months later he helped me put together a new business plan, and then shocked my by saying he couldn't give me the loan, but to try another bank, due to a conflict of interest.  I did secure the loan and paid it off in 3 years.   I guess you could say a bad boss provided the catalyst to suceed.  I've been working hard ever since. 

Mar 30, 2012 11:11AM
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still seems to be the good old boys are still buying and selling the market.  The average guy is still out.  The volume has never been so low.  As with all pyramid schemes you need new buyers
Which is why this market will grasp at anything positive it can find to maintain the illusion that everything is smooth sailing. Forget ALL of Europe is in a recession, forget China is slowing way down, forget the US. lost it's triple A rating and is 14 TRILLION$$ in the hole and falling deeper by the second, forget that just about every company in this country has been lowering their forecast for profits in 2012. Hey!! IT"S ALL GOOD.  We'll just print more worthless money (QE-3) and that will keep the markets looking good. QE is a lot like running the bilge-pumps on the TITANIC, It will keep you afloat a little while longer but in the end it's not going to save the ship.
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