The Shadow
NEW YORK (AP) – Stocks rose modestly in early morning trading Wednesday on more signs consumers are spending again. Major indexes are up for the fourth straight day.
Overseas markets are rising as well, also boosted by prospects for economic growth. Major indexes in France and Germany both hit 2009 highs a day after the Standard & Poor’s 500 index and the Nasdaq composite index closed at their highs for the year.
The Commerce Department on Wednesday reported that consumers’ income rose at the fastest rate in four months in November, allowing them to increase their spending for the second straight month. Consumer spending is critical for a rebound in the economy because it accounts for about 70 percent of all economic activity.
The government also said personal incomes rose 0.4 percent, helped by an increase in wages. Spending increased 0.5 percent last month.
The rise in wages reflects a decline in the unemployment rate last month to 10 percent. Treasury Secretary Timothy Geithner said on ABC’s “Good Morning America” that it is reasonable to expect employers will start adding jobs by the spring.
Economists polled by Thomson Reuters estimated spending increased 0.6 percent in November, while income rose 0.5 percent. Although the results fell short of expectations, signs of improvement are reassuring investors the economy is getting better.
In early trading, the Dow Jones industrial average rose 22.75, or 0.2 percent, to 10,487.68. The S&P 500 rose 3.34, or 0.3 percent to 1,121.36, while the Nasdaq composite index rose 9.14, or 0.4 percent, to 2,261.81.
Investors are also awaiting a report from the Commerce Department that is expected to show sales of new homes continued to grow in November. It would mark the third straight monthly rise.
Economists expect new home sales jumped 2.3 percent to a seasonally adjusted annual rate of 440,000 from 430,000 in October.
The new home sales’ report is scheduled to be released at 10 a.m. EST.
Stocks rallied Tuesday after the National Association of Realtors said sales of existing homes grew more than expected last month. Sales of existing homes rose 7.4 percent in November, much stronger than the 2.5 percent increase that was expected.
