While you were sleeping: Consumer gains confidence
March 26 (BusinessDesk) – Wall Street gained after data showing US consumer confidence has improved to a six-year high bolstered expectations that the recovery of the world’s biggest economy is intact.
The Conference Board’s index of US consumer confidence rose to 82.3 in March, up from 78.3 in February, a report showed today. The gain was larger than expected.
“While consumers were moderately more upbeat about future job prospects and the overall economy, they were less optimistic about income growth,” Lynn Franco, director of economic indicators at The Conference Board, said in a statement. “Overall, consumers expect the economy to continue improving and believe it may even pick up a little steam in the months ahead.”
Separately, purchases of new homes declined in February, falling 3.3 percent to a seasonally adjusted annual rate of 440,000 units, the lowest level since September 2013.
Investors opted to focus on the bright side. In afternoon trading in New York, the Dow Jones Industrial Average rose 0.76 percent, the Standard & Poor’s 500 Index added 0.45 percent, while the Nasdaq Composite Index advanced 0.17 percent.
“The world is nowhere near fully invested. Global growth will kick in once the US frees itself from a freezing cold winter and you want to own a slice of that,” William Hobbs, the London-based head of equity strategy at Barclays’ wealth-management unit, told Bloomberg News. “We expect synchronised and accelerating growth from most of the developed economies.”
Gains in shares of IBM and Cisco, up 3.3 percent and 2.6 percent respectively, led the advance in the Dow.
Meanwhile, Philadelphia Fed President Charles Plosser told CNBC he was surprised by the market's reaction following Fed Chairman Janet Yellen’s comments at the conclusion of the FOMC meeting last week.
Last Wednesday Yellen said interest rates might rise as early as the first half of 2015.
“It's a little bit puzzling that the market would react the way it did," Plosser said on CNBC's "Squawk Box." "I don't think the Fed changed its position. In fact, it tried to say very explicitly in its statement that we believe forward guidance or the expectations have not changed as far as we're concerned."
In Europe, the Stoxx 600 Index finished the day with an advance of 1.3 percent from the previous close, as did the UK’s FTSE 100. France’s CAC 40 and Germany’s DAX both climbed 1.6 percent.
In Germany, business confidence weakened. The Ifo institute’s business-climate index slid to 110.7 in March, down from 111.3 in February.
Some investors found value in gold prices that touched the lowest level since February 14. Gold futures for June delivery were up 0.1 percent to US$1,312.80 an ounce on the Comex in New York, after earlier in the day sliding as low as US$1,305.90, according to Bloomberg News.
Commodities in general were lifted in part by hopes that the Chinese government may seek to prop up its weakening economy.