All three major stock indexes, however, fell for the fourth week in a row.
Kenny Eley fuels his car with his daughter Kenisha, 4, as they prepare for the Memorial Day weekend in Richmond, Va., Friday. For every $10 a household earns, almost a full dollar now goes toward gasoline, forcing Americans to rethink what they spend on everything else, including the family vacation. NEW YORK – Maybe American consumers are better off than everybody thought.
A key measure of consumer confidence rose unexpectedly this month. Meanwhile, Americans’ spending and income rose in April, giving stocks their third straight day of gains on Friday. The market was still down slightly for the week.
The Thomson Reuters/University of Michigan Consumer Sentiment index rose to 74.3 in May, above analysts’ estimates of 70. Concerns about higher gas prices and inflation knocked the gauge down in March and April.
Gas prices have come down in May after reaching nearly $4 last month, giving a lift to the closely watched measure of how people feel about the economy. That raised hopes that people might be willing to spend more.
“That’s what a 25-cent drop in gas prices will do,” David Ader, bond strategist at CRT Capital Group, wrote in an email to clients.
Both personal income and spending rose 0.4 percent in April, in line with what economists expected, according to the Commerce Department. Still, higher prices for food and gas ate up most of the gains in income. The report from the Commerce Department lags by a month, so the recent decline in gas prices isn’t reflected in those figures.
The Dow Jones industrial average rose 38.82 points, or 0.3 percent, to 12,441.58. The Standard & Poor’s 500 index rose 5.41 points, or 0.4 percent, to 1,331.10. The Nasdaq composite rose 13.94 points, or 0.5 percent, to 2,796.86.
All three major stock indexes fell slightly for the week, the fourth week in a row of declines. The Dow lost 0.6 percent, and the S&P 500 and Nasdaq each lost 0.2 percent. The last time stocks fell for four weeks in a row was February 2010. Still, the Dow is up 7.5 percent for the year. The S&P 500 is up 5.8 percent, the Nasdaq 5.4 percent.
The week started with a batch of bad news from Europe. Another downgrade of Greece’s already weak credit rating, a warning on Italy’s debt and a defeat of Spain’s ruling party deepened worries about Europe’s fiscal crisis. The Dow fell 131 points on Monday after the news.
U.S. stock indexes hit their highest levels of the year April 29 following a strong run of corporate earnings. The S&P 500 has lost 2.4 percent since then as Greece struggles to avoid default and U.S. economic forecasts were revised lower, partly due to high gas prices.
Marvell Technology Group Ltd. jumped 11 percent. The maker of chips for data-storage and Blackberry’s smartphones reported a slight drop in earnings. But Marvell’s CEO forecast higher sales in the current quarter.
Another chipmaker, Broadcom Corp. rose 5 percent. FBR Capital Markets said Broadcom should benefit from growing demand for smartphones. FBR put the company on its list of top picks.
CVS Caremark Corp. rose 2 percent after the pharmacy benefits company won a three-year contract from the Blue Cross Blue Shield Federal Employee Program.
Nearly three stocks rose for every one that fell on the New York Stock Exchange.
Trading was thin ahead of the Memorial Day holiday. Consolidated volume on the NYSE was 2.8 billion shares. Markets will be closed Monday.