Jump in consumer confidence gives boost to stocks

By MADLEN READ and TIM PARADIS – 04/28/2009

NEW YORK (AP) — Investors set aside some of their worries about the economy

Tuesday after a closely watched measure of consumer confidence soared in April.

Stocks fluctuated in a narrow range as concerns about the spread of swine flu and the

viability of banks were eased when the Conference Board reported that its Consumer

Confidence Index surged 12 points to 39.2 this month.

The reading is the highest since November and far better than the 29.5 number that

economists had expected. The report suggests consumers might be willing to spend more

if confidence continues to build.

In early afternoon trading, the Dow Jones industrial average rose 16.56, or 0.2 percent, to

8,041.56 after being down as much as 86 ahead of the report.

Broader stock indicators also rose but remained volatile. The Standard & Poor's 500

index fell 2.27, or 0.3 percent, to 859.78, and the Nasdaq composite index rose 7.80, or

0.5 percent, to 1,687.21.

Todd Leone, managing director of equity trading at Cowen & Co., said investors have

been growing more upbeat about prospects for the economy. That optimism followed a

string of better-than-expected readings and has driven a market rally since early March.

"People aren't as afraid as they have been. We're definitely seeing more money come

back into the market," he said.

That optimism took a hit ahead of the confidence reading as investors worried that a

growth in swine flu cases could hurt industries such as travel and tourism. The World

Health Organization raised its alert to Phase 4 out of 6, saying the flu spreads easily but is

not a pandemic.

Banking troubles came back into the spotlight after The Wall Street Journal reported that

regulators told Bank of America Corp. and Citigroup Inc. that they may need to raise

more capital.

Government officials briefed the 19 biggest U.S. banks last week about "stress tests" they

have conducted on them, but the results aren't expected to be made public until early

May.

Bank of America fell 60 cents, or 6.7 percent, to $8.32, while Citigroup fell 14 cents, or

4.6 percent, to $2.93.

But the report on consumer confidence bolstered hopes that consumers not unemployed

or struggling with debt might begin to step up their spending.

Some stocks that depend on consumer spending rose. Starbucks Corp. rose 56 cents, or

4.2 percent, to $13.76, while Coca-Cola Co. rose 14 cents to $42.38.

IBM Corp. rose $1.84, or 1.8 percent, to $101.79 after the company boosted its quarterly

dividend 5 cents to 55 cents. The company also said its board has authorized another $3

billion for repurchasing stock. The move brings the total available for buying up shares to

$6.7 billion.

In other economic data, the S&P/Case-Shiller index of home prices in 20 major cities

showed a 18.6 percent drop in February. That was smaller than in January and in line

with analysts' expectations.

Housing stocks were mixed. Hovnanian Enterprises rose 28 cents, or 10.4 percent, to

$2.97, while KBR Inc. slipped 1 cent to $15.99.

The Federal Reserve is beginning a two-day meeting on interest rates. The Fed has

already lowered its target rate to a range of zero to 0.25 percent and started buying

Treasurys in an effort to keep market rates low. Investors are curious about the central

bank's assessment of the economy, and whether it will accelerate its purchases of

government bonds.

The swine flu gave investors reason to cash in recent gains Monday, sending stocks

moderately lower. The Dow remains up 22.6 percent, though, from the nearly 12-year

low it reached in early March.

In other trading Tuesday, the Russell 2000 index of smaller companies rose 8.13, or 1.7

percent, to 477.66.

U.S. government bond prices fell, pushing the yield on the 10-year Treasury note up to

2.97 percent from 2.91 percent.

The dollar was mostly higher against other major currencies. Gold prices fell.

Light, sweet crude fell 74 cents to $49.40 a barrel on the New York Mercantile

Exchange.

About four stocks rose for every three that fell on the New York Stock Exchange, where

volume came to a light 593.6 million shares.

Overseas, Japan's Nikkei stock average fell 2.7 percent. In afternoon trading in Europe,

Britain's FTSE 100 fell 1.7 percent, Germany's DAX index fell 1.9 percent and France's

CAC-40 fell 1.7 percent.

Copyright © 2009 The Associated Press. All rights reserved.