U.S. Indexes Extend Gains; Consumer Spending Up 0.8%

Nichole Harper
30 Mar, 2012
New York City

U.S. stocks extend gains on the last day of the quartet and the benchmark index is set to close up 12% in the quarter. The stocks were higher after U.S. consumer spending rose 0.8% in February, the most in seven months and European ministers agreed to increase bailout fund size.

[R]10:30 AM New York – U.S. stocks extend gains on the last day of the quartet and the benchmark index is set to close up 12% in the quarter. The stocks were higher after U.S. consumer spending rose 0.8% in February, the most in seven months and European ministers agreed to increase bailout fund size.[/R]

U.S. indexes and stocks were modestly higher in the early trading on the last day of the week and the first quarter after consumer increased spending in February.

The S&P 500 index extends gains and is set to close up 12% in the first quarter as investors bid up stocks on the receding euro zone worries and improved domestic economic backdrop.

Consumer Spending Rises, Savings Fall

The Commerce Department said today consumer spending increased 0.8% last month after growing at revised 0.4% increase in January. The monthly spending rose at the fastest pace in seven months but most of the gains were driven by higher gasoline prices and inflation.

Spending increased 0.5% after adjusting for inflation and fell 0.1% in the month after adjusting for inflation and taxes, the third monthly decline in the past four months.

Savings after tax declined to 3.7%, the lowest increase since August of 2009 and fell from 4.3% in January. Savings averages 4.7% in 2011.

Incomes increased 0.2% in the month and wages and salaries added 0.3% and interest payments were nearly flat for the second month in a row.

Europe Lifts Bailout Fund Size

European indexes edged higher after European finance ministers agreed to increase the size of the bailout funds to tackle future sovereign crisis.

The group included the existing bailout funds of long term commitment by €300 billion and raised the combined ceiling of the temporary and permanent funds that included the funds that are already committed to €800 billion.

But the group of ministers left the size of the temporary rescue fund at €240 billion. Finance ministers also agreed to commit additional €150 billion in contributions to the International Monetary Fund.