- The Washington Times - Wednesday, May 27, 2009

Wall Street closed Tuesday with gains following another increase in consumer confidence.

The Dow Jones Industrial Average closed at 8,473.49, up 196.17 points. The broader Standard & Poor’s 500 Index closed at 910.33, up 23.33 points, and the tech-heavy Nasdaq Composite Index closed at 1,750.43, up 58.42 points.

The Conference Board’s Consumer Confidence Index increased in May to 54.9, from 40.8 in April, exceeding analysts’ expectations. The index’s bench mark is 100 in 1985.

The monthly increase is the second straight one and suggests that consumers are spending again, which would stimulate an economy in a 17-month recession. Consumer spending makes up about two-thirds of U.S. economic activity.

The index’s increase squares with a positive prediction from a group of economists, 90 percent of whom said the recession will end this year, although the recovery is likely to be bumpy.

That assessment came from leading forecasters in a survey by the National Association for Business Economics to be released Wednesday. It is generally in line with the outlook from Federal Reserve Chairman Ben S. Bernanke and his colleagues.

About 74 percent of the forecasters expect the recession - which started in December 2007 and is the longest since War World II - to end in the third quarter. Another 19 percent predict the turning point will come in the final three months of this year, and the remaining 7 percent believe the recession will end in the first quarter of 2010.

“While the overall tone remains soft, there are emerging signs that the economy is stabilizing,” said NABE President Chris Varvares, head of Macroeconomic Advisers. “The economic recovery is likely to be considerably more moderate than those typically experienced following steep declines.”

Spending-related stocks such as Target and J.C. Penney increased Tuesday after the private research group’s upbeat report.

Target stock closed at $41 a share, up 26 cents. J.C. Penney closed at $26.63, up $1.50.

U.S. markets opened amid investor concerns about North Korea’s test of nuclear weapons and Standard & Poor’s statement last week that it could lower Britain’s credit rating because of London’s increasing debt.

The markets are up about 25 percent since hitting a 12-year low in early March, largely because most major U.S. banks reported first-quarter earnings that were better than expected, then passed the government’s so-called “stress tests.”

However, investors over the past couple of weeks appear more concerned about the markets recovering too fast and growing too big amid such lingering problems as high unemployment, tight credit, a struggling housing market and the global economy.

The S&P-Case; Shiller report Tuesday for home prices in 20 major U.S. cities showed an 18.7 percent increase compared with a similar period in 2008.

Investors also are watching General Motors Corp. approach its June 1 restructuring deadline. The automaker borrowed an additional $4 billion last week from the government, after receiving $15.4 billion.

GM stock closed Tuesday at $1.44, down 1 cent a share.

In overseas trading, Japan’s Nikkei stock average fell 0.39 percent, Britain’s FTSE 100 rose 1.06 percent, Germany’s DAX rose 1.37 percent, and France’s CAC-40 rose 1.05 percent.

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