By Anora Mahmudova
NEW YORK (MarketWatch) -- U.S. stocks rose Monday, sending
indexes to record levels, as consumer-spending data reinforced
perceptions that the U.S. economic recovery is set to pick up speed
in 2014.
The S&P 500 (SPX) rose 10.62 points, or 0.6%, to 1,828.94.
The Dow Jones Industrial Average (DJI) advanced 89.13 points, or
0.6%, to 16,310.59. The Nasdaq Composite (RIXF) jumped 38.52
points, or 0.9%, to 4,143.27, aided by a big rally in its largest
component, Apple Inc.
Both the S&P and the Dow industrials closed at record levels
on Friday.
Stocks jumped last week when the Federal Reserve decided last
week to begin scaling back the size of its monthly bond purchases
in January.
Investors "should remember that the Fed is reducing the pace of
asset purchases expressly due to a strengthening economy," said
Jerry Webman, chief economist at Oppenheimer Funds, in a note.
"Markets apparently get that now, whereas last May, when the Fed
first indicated it was preparing to taper, the reaction was broadly
negative at first, though growth-oriented asset classes and
subcategories rebounded fairly quickly," he said.
Meanwhile, data released Monday showed U.S. consumer spending
outpaced a modest rise in personal income. Consumer spending rose a
seasonally adjusted 0.5% last month, the fastest pace since June
and in line with expectations. However personal income only rose
0.2%, less than the 0.4% gain that Wall Street economists had
expected.
Separately, consumer sentiment rose this month to the highest
level since July, according to University of Michigan/Thomson
Reuters consumer-sentiment index, which hit 82.5, mostly in line
with expectations.
Speaking Monday on CNBC, Richmond Fed President Jeffrey Lacker
said his forecast for the trajectory of the fed funds rate is the
third-highest among members of the Fed. He expects the rate to hit
2% by the end of 2015, from its current target of near zero.
"I put early 2015 for when fed funds rate will lift off but that
is something that can change one way or another," he said.
He also said the central bank's decision to reduce monthly asset
purchases from $85 billion to $75 billion was the right one and
that the impending departure of Fed chairman Ben Bernanke had
"nothing at all" to do with the decision to taper its stimulus
program.
"Given the data, given the way the committee positioned itself
over the program. this decision was kind of a slam-dunk," Lacker
said during the interview.
The comment:
* The International Monetary Fund's managing director, Christine
Lagarde, said Sunday on NBC's "Meet the Press" that the country's
economic growth is picking up and that it is poised to accelerate
as the business climate sees more certainty in 2014. Adding to that
sense of certainty is a budget deal reached by Congress and clear
communication from the Federal Reserve about its plan to wind down
its bond-buying program, Lagarde said.
In the corporate sector:
* Shares of Apple jumped 3.1% after the tech group on Sunday
confirmed it has reached a deal with China Mobile for the mobile
provider to officially carry the iPhone. China Mobile will start
selling the iPhone 5s and 5c starting on Jan. 17, with preorders
starting this Wednesday.
* Among home builders, Lennar Corp. rose 3.7%, while D.R. Horton
Inc. added 2.8%.
* Facebook Inc. rose more than 5%, as it began trading as part
of the S&P 500 index for the first time. Shares added more than
3% last week and have more than doubled since the start of the
year.
* Michael Kors Holdings Ltd. shares dropped 4.1% after Wedbush
wrote that it is cautious about the stock "due to
slower-than-expected mall traffic that resulted in a
higher-than-expected markdown inventory."
* BlackBerry Ltd. erased early weakness to rise 5.8%, adding to
Friday's gains, when the stock rallied 13% in heavy volume, after
the company announced a five-year manufacturing deal with
Foxconn.
In other financial markets:
* Asia indexes closed mostly higher, while European stocks ended
at a three-week high. Metals prices traded mixed and oil prices
were on the decline. The dollar was slightly lower.
More on MarketWatch:
Consumer spending pick up in November
Lacker says short-term rates could hit 2% by end of 2015
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