EW YORK (AP) — Consumers’ more upbeat mood is spreading to Wall Street.

Stocks surged Tuesday after the Conference Board said consumer sentiment rose in May to the highest level since September. All the major stock indicators rose more than 2 percent, including the Dow Jones industrial average, which jumped 200 points.

The research group’s Consumer Confidence Index vaulted to 54.9 from 40.8, soaring past the 42.3 that economists surveyed by Thomson Reuters expected.

Investors watch the indicator for signs of whether consumers might start shopping more or making bigger purchases such as cars and homes. Spending by consumers makes up more than two-thirds of U.S. economic activity.

Jim King, chief investment officer at National Penn Investors Trust Co., said the improvement in consumer confidence surprised investors. With unemployment still high and expected to go higher, many market watchers thought the mood on Main Street would remain gloomy.

“I think the consumer confidence figure is one that no one really pinned a lot of hopes on as going higher,” he said.

In early afternoon trading, the Dow rose 200.24, or 2.4 percent, to 8,477.56. The Standard & Poor’s 500 index rose 22.12, or 2.5 percent, to 909.12, and the technology-laden Nasdaq composite index rose 54.86, or 3.2 percent, to 1,746.87.

Stocks dependent on strong consumer spending jumped. Macy’s Inc. rose 66 cents, or 5.9 percent, to $11.85, while Best Buy Co. advanced $2.04, or 5.8 percent, to $37.22. Home builder KB Home rose 94 cents, or 6.4 percent, to $15.58.

Gains in home builder stocks came as investors shook off a mostly downbeat reading on the housing market. S&P/Case Shiller reported a 18.7 percent drop in its March home price index. The decrease was a little bigger than in February, and slightly larger than economists predicted.

Tech stocks showed some of the biggest gains in part after an analyst raised her rating on Apple Inc. She contends the growth of the company’s iPhone device has been underestimated. Apple rose $7.31, or 6 percent, to $129.81.

Investors have been questioning whether the stock market’s massive two-month rally can be sustained given the continuing weakness in the global economy. The Dow is still up 26.4 percent from its 12-year low hit on March 9. Even with those gains, the Dow is still down 41.6 percent from its peak in October 2007.

After mixed economic data over the last couple weeks, as well as a huge number of stock offerings by banks, the market is likely to stay volatile in the coming weeks, said Steven Goldman, chief market strategist at Weeden & Co. “The market’s had a pretty huge gain here,” he said.

Last week, the major market indexes ended modestly higher, but only after seesawing on worries about the economy and banks.

This week, the market is not only hoping for signs of global stability, but also watching General Motors Corp. as the automaker’s June 1 restructuring deadline approaches. GM is expected to close more plants and force more employee concessions as it tries to avoid bankruptcy court.

On Friday, GM borrowed another $4 billion from the U.S. government, after already received $15.4 billion. GM shares fell 20 cents, or 14 percent, to $1.23.

In other trading, the Russell 2000 index of smaller companies rose 20.44, or 4.3 percent, to 498.06.

About five stocks rose for every one that fell on the New York Mercantile Exchange, where volume came to 601.5 million shares compared with 522.6 million shares at the same time Friday.

Bond prices fell, pushing the yield on the 10-year Treasury note up to 3.47 percent from 3.46 percent late Friday.

source: yahoo finance.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose 6 cents to $61.73 per barrel on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average fell 0.4 percent. Britain’s FTSE 100 rose 1.1 percent, Germany’s DAX index rose 1.4 percent, and France’s CAC-40 rose 1.1 percent.

source: yahoo finance.

Tags: consumer confidence, GM motors, Jim King, Macy's Inc, National Penn Investors Trust, wall street, yahoo finance

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