By Rita Nazareth - Mar 30, 2012 8:32 PM GMT+0700
U.S. stocks rose, extending the Standard & Poor’s 500 Index’s biggest first-quarter advance since 1998, as larger-than-forecast growth in consumer spending bolstered optimism in the economy.
The S&P 500 increased 0.3 percent to 1,408.12 at 9:30 a.m. New York time. The benchmark gauge has rallied 12 percent since the beginning of 2012, gaining for a second straight quarter. The Dow Jones Industrial Average advanced 42.76 points, or 0.3 percent, to 13,188.58 today.
“Things are not going gangbusters, but they are more positive,” Ann Miletti, senior portfolio manager for Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in a telephone interview. Her firm manages $213 billion. “The tail risk of Europe seems to have gone away. In an environment where you have stocks trading at discounts to their historical levels, it does create a sweet spot.”
More than $3.6 trillion was restored to U.S. equity values since the S&P 500 reached last year’s low in October as better- than-estimated economic and corporate data bolstered demand for stocks. The index climbed 28 percent from Oct. 3 through yesterday. The rally sent the S&P 500 to 14.5 times reported earnings, the highest valuation since July while below the average since 1954 of 16.4.
The S&P 500 has increased 3.2 percent in March (SPX), rallying for a fourth straight month. The Dow has climbed 1.9 percent since the end of February and is poised to cap a sixth month of gains. Both gauges are headed for the longest stretches of monthly gains since 2009.
Dow History
Over the last 100 years, the Dow has advanced 1.3 percent on average in April (INDU) and gained 57 percent of the time, according to data compiled by Bespoke Investment Group. The index has risen an average 2.1 percent in April over the last 50 years and 2.9 percent in the past 20 years, the data showed, marking the best month for the Dow in both time frames.
Stocks rose today as government data showed U.S. consumer spending increased 0.8 percent in February, the most in seven months and more than the median economist estimate of 0.6 percent, signaling the biggest part of the economy is strengthening. Another report may show consumer sentiment held near a one-year high.
Investors also watched the latest attempts in taming Europe’s debt crisis. Adding the 300 billion euros already committed to Greece, Ireland and Portugal, euro-area finance ministers put the overall size of the firewall at 800 billion euros. Finance ministers ruled out using the 240 billion euros left in the temporary rescue fund to go beyond that.
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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