Stocks rise after increase in consumer spending

NEW YORK — Stocks rose Monday after an increase in consumer spending boosted confidence in the economy.

The Dow Jones Industrial Average rose about 45 points in afternoon trading. Broader indexes also climbed.

The Commerce Department said consumer spending rose for the fifth consecutive month in February, matching economists’ expectations.

Job creation and healthy consumer spending are considered keys to a sustained recovery. At the end of the week, investors will get the Labor Department’s monthly employment report, which is expected to show employers added jobs this month for only the second time since the recession began in December 2007.

Financial shares were mixed after the U.S. Department of the Treasury said it would start to sell the shares it owns in Citigroup Inc. The government took 7.7 billion Citigroup shares in exchange for $25 billion it gave the bank during the 2008 credit crisis. The planned sale during the next year could result in a profit of more than $7.5 billion.

The stock market has been climbing at a steady pace since early February on expectations that the economy is looking up. Many reports still point to a weak economy but indicate that conditions are improving.

“The market seems to be holding up pretty well and probably will for a while,” said Frank Haines, chief investment officer at Christian Brothers Investment Services in New York. Haines said low interest rates will help stocks for now but that longer-term threats like uncertainty about policies in Washington and rising debt levels in the U.S. and other countries could eventually hurt markets.

In midday trading, the Dow rose 46.70, or 0.4 percent, to 10,897.06. The broader Standard & Poor’s 500 index rose 6.08, or 0.5 percent, to 1,172.67, and the Nasdaq Composite Index rose 12.14, or 0.5 percent, to 2,407.27.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.88 percent from 3.85 percent late
Friday.

The gain in stocks and easing demand for safety of Treasurys came after the government said consumer spending rose 0.3 percent in February. The increase raised hopes that consumers are regaining confidence and will bump up spending. Consumer spending is the biggest driver of the U.S. economy.

The same report said personal income was unchanged last month. Economists had forecast growth of 0.1 percent. Weakness in personal income could be a cap on spending.

Economists predict employers added 190,000 jobs in March, though some of those jobs are tied to temporary hiring for the census. The report will come as markets are closed for Good Friday.

The market’s gain Monday followed two mixed days. On Thursday and Friday, shares rallied in the morning only to retreat to near flat levels by the closing bell when buying faded.

There was no clear reason for the retrenchment Friday, though analysts said it was expected that the market would slow after a two-month climb with few interruptions.