Dow and S&P make history as first-quarter ends

Paula Duffy's picture

On Friday, stocks were up again and both the Dow Jones Industrials and the S&P 500 registered their best first-quarter performance ever.

Consumer spending increased in February, more than expected and the markets took off early and stayed there until the bells rung to close the day.

Dow Industrials rose 994 points, or 8.1%, and the S&P 500 rose 150.87 points, or 12%, during the first three months of 2012, according to the Wall Street Journal. The NASDAQ missed its own record first-quarter results after a decline of 3.79% on the day.

Bloomberg reported that the 0.8% increase in consumer spending was the largest since July 2011.

While spending increased, savings and income numbers declined, but the better than expected spending date buoyed spirits on Wall Street. Not too long ago, a hike in spending and a drop in income and savings would have meant doom and gloom in the markets.

With the encouraging employment numbers announced earlier this month, the negative effect was blunted with the hope that Americans will spend enough to further the economic recovery in progress. The jobless rate remained at 8.3 percent in February, and employers increased the work force in the past six months more than at any time in six years.

Earlier this week, the markets rose despite slight dips in both consumer confidence and housing prices around the country.

The Conference Board’s consumer confidence index registered 70.2, down from a revised 71.6 report from February. That month's numbers were the best in a year. The gas prices of more than $4.00 a gallon were a factor but encouraging employment numbers and continuation of the rise in stock markets may have helped balance that out.

The employment report kicked off a great week on Wall Street. The report from the Bureau of Labor Statistics showed non-farm payroll employment rose by 227,000 in February, the unemployment rate was unchanged at 8.3 percent and employment rose in professional and businesses services, health care and social assistance, leisure and hospitality, manufacturing, and mining.

Is it the beginning of a new bubble with stocks recording big gains? No says David Kelly of JP Morgan Funds. He told Bloomberg, "“People are less fearful of a global financial meltdown emanating from Europe. If you look at valuations and the potential for economic growth, those things tell me the market should have room to move higher over the next few years.”

One particular company's stock rose significantly, helping along the markets reach this quarter's record. Research In Motion shares rose more than 7% after the company told analysts that a sale could be in the cards.

Image: Wikimedia Commons

Add new comment