After the Bell
Low Consumer Spending Boosts Market
Friday, May 26, 2006; 4:39 PM
The stock market rebounded today after government reports show consumer spending is barely growing -- which means inflation should not be a problem.
Consumer spending grew by 0.6 percent in April, the Commerce Department reported, but most of that was due to higher prices for gasoline.
Once gas prices are factored out, spending increased only 0.1 percent, the weakest gain since last October.
While soft consumer spending can sometimes spook the market because it signals a slowing economy, Wall Street these day is more worried about rapidly-growing spending, which would mean inflation and higher interest rates. But there was not even a hint of inflation in today's data.
Based on that benign reading, stocks climbed across the board today, giving Wall Street a winning week after two painful losses in a row.
The Dow Jones industrial average gained nearly 68 points to 11,278.61.
The Nasdaq Stock Market composite index climbed 12 to 2,210.37.
The Standard & Poor's 500 stock index advanced 7 points to 1,280.16.
For the week, the Dow was up 136 points, the Nasdaq composite gained 17 and the S&P 500 added 13 points. The recovery brought the Nasdaq index back to just barely above breakeven for the year, leaving the S&P ahead by 2.6 percent and the Dow up 5.3 percent.
This is my last After The Bell column. My final Washington Investing column will run on Monday. After 27 years, I've accepted an early retirement offer along with about 50 other Post journalists. Thanks to all the print and online readers and NBC4 viewers who made this job so enjoyable.