Stocks rise as consumers boost spending

JOSHUA FREED AP Business Writer Published:

Stocks mostly rose on Friday after the government reported that Americans spent more in February even though their incomes barely grew. The gain extended the strongest start for the stock market since 1998.

In late-morning trading, the Dow Jones industrial average was up 47 points to 13,193. The Standard & Poor's 500 index rose four points to 1,408. The Nasdaq composite rose two points to 3,098.

The Dow was headed toward an 8 percent gain for first-quarter trading, which ends Friday. The S&P 500 was close to a 12 percent gain. Both would be the strongest three-month starts since 1998.

The Nasdaq is up almost 19 percent for the year and appeared in safe territory for its best first quarter since 1991.

The Commerce Department said consumer spending rose in February at the fastest rate in seven months. It's been driven by strong hiring over the last three months -- the best jobs growth in two years.

Americans spent more even though their income has stagnated for two months after counting taxes and inflation. Some of the increased spending has gone to gasoline, which is the most expensive on record for this time of year.

Most industry groups in the S&P 500 rose, led by a half-percent rise in health care stocks. Technology stocks fell 0.2 percent, and financials were flat.

Shares of BlackBerry maker Research in Motion Ltd. rose 3.9 percent a day after the Canadian company said it would return to focusing on corporate customers and shake up its management to try to get profits growing again.

Best Buy was down almost 2.5 percent as investors continued to digest its plan to cut stores and staff as it shifts toward smaller stores in an effort to compete with online retailers. Best Buy stock lost almost 7 percent on Thursday.

Sports apparel maker Finish Line Inc. fell almost 14 percent after it predicted a lower-than-expected first-quarter profit.

European markets bounced back after a rocky week that included a national strike in Spain. On Friday, the country unveiled a draft 2012 budget that seeks to cut the deficit by $36 billion through spending cuts and a tax hike on large companies. But Spain also plans to cut government ministry spending by an average of nearly 17 percent.

Germany's DAX was up 0.9 percent at 6,935, while the CAC-40 in France rose 1.2 percent to 3,420. The FTSE 100 index of leading British shares was up 0.5 percent to 5,772.

Asian markets took a hit after some poor factory production numbers from Japan.