US stocks climbed more than 2 per cent yesterday as data showing the biggest monthly jump in consumer confidence in six years lifted hopes of an economic rebound, and a brokerage upgrade of Apple drove sharp gains on the Nasdaq.
Apple’s shares closed nearly 7 per cent higher after Morgan Stanley said the iPhone will drive strong earnings growth over the next two years and raised its price target on the stock.
An index of US consumer confidence surged in May, strongly topping expectations as it registered the biggest monthly jump since April 2003, according to the Conference Board, an industry group.
Consumer discretionary shares were among the top gainers on the Dow and S&P 500, with McDonalds up 3.1 per cent, retailer Macy’s up 5.9 per cent and the S&P consumer discretionary index up 3.8 per cent.
“Today the market is celebrating the return of some sign of consumer confidence,” said Peter Kenny, managing director at Knight Equity Markets.
“It was so strong, even the dismal housing numbers couldn’t bring the market down,” he added.
The news influenced the broad market, but consumer discretionary, restaurants and even Apple shares received the biggest boost, he said. “It’s all the same script,” Kenny said.
Other data yesterday showed prices of single-family homes fell in March from a year earlier. The pace of decline, however, slowed for a second consecutive month.
The Dow Jones industrial average rose 196.17 points, or 2.37 per cent, to finish at 8,473.49. The Standard & Poor’s 500 Index was up 23.33 points, or 2.63 per cent, at 910.33. The Nasdaq Composite Index was up 58.42 points, or 3.45 per cent, at 1,750.43.
Consumer spending accounts for roughly two-thirds of the US economy. The US confidence data followed similarly rosy consumer reports in Germany and France.
The data also seemed to outweigh geopolitical concerns over North Korea’s latest nuclear and missile tests, which pressured stocks at the open.
The market’s gains came after four straight days of losses