FOX Business: The Power to Prosper
A brighter outlook for the U.S. economy and calming tensions over Europe's debt crisis whetted traders' risk appetite, sending Wall Street surging in its best first-quarter performance in 14 years.
The Dow Jones Industrial Average gained 66.2 points, or 0.5%, to13212, the S&P 500 climbed 5.2 points, or 0.37%, to 1408 and the Nasdaq Composite dipped 3.8 points, or 0.12%, to 3092.
The S&P 500 soared 12% in the first quarter, while the Dow zoomed 8.1% to the upside. The tech-heavy Nasdaq posted a better performance, soaring some 18.7% in the best start to a year since 1991. All three are up for two quarters in a row, rising more than 20% each. Indeed, the blue chips have tacked on 2,299 points in that time.
In a sign of traders' appetite for risk, the yield on the 10-year Treasury jumped 0.34-percentage point to 2.218% as they fled the shelter of U.S. debt. Meanwhile, volatility plunged by one third as tracked by the Chicago Board of Options Exchange's VIX, sometimes referred to as Wall Street's fear gauge.
Out of the major sectors, financials performed the best by far. In fact, JPMorgan Chase (JPM) and Bank of America (BAC) were the best performers on the Dow, while American Express (AXP) came in fourth. Technology stocks had a particularly strong showing as well, helped by rallying shares of titans like Apple (AAPL) and Microsoft (MSFT).
Energy futures got a boost on the quarter from the upbeat sentiment and also heightened concerns that strife between Western countries and Iran would strangle the world's supply of oil. Crude oil traded in New York climbed $4.19, or 4.2%, to $103.02 a barrel. New York Harbor gasoline put on much bigger gains: zooming 70 cents, or 26.2%, to $3.39 a gallon.
In metals, gold jumped $103.50, or 6.6%, to $1,669 a troy ounce.
Strong Data, But Will it Last?
A stream of strong data on the U.S. economy, the world's biggest, has played a major role in the rally, although several key reports this week came in beneath Wall Street's optimistic expectations.
The markets have also been helped by a calming of fears over the European debt crisis that had roiled the markets during the summer of 2011. Indeed, sovereign debt yields have fallen significantly in countries like Spain and Italy, and Europe's financial system has gotten a boost from cheap loans by the European Central Bank. Still, some analysts wonder what will happen when global central banks and big players like Germany begin to ease off of their pro-growth policies.
"Investors can look back on the past three months with a degree of satisfaction, after the impressive run higher for markets," Chris Beauchamp, a market analyst at London's IG Index wrote in an e-mail. "However, the future looks less assured."
On that front, eurozone finance ministers agreed on Friday to temporarily boost the firepower of the 17-member currency bloc's rescue funds. The so-called firewall that is designed to help mitigate the effects of the debt crisis in Greece and other areas in the periphery will now hit nearly $934 billion in total.
Consumer sentiment jumped during the end of March. The final reading of the Reuters/University of Michigan's gauge rose to 76.2 from a preliminary reading of 74.3. Economists were looking for 74.7. Sentiment is now at its highest level since February 2011.
A separate report showed U.S. consumer spending increased by 0.8% in February from January, quicker than the 0.6% economists expected, and the biggest increase since July. Meanwhile, personal income edged higher by 0.2%, which was weaker than the 0.4% economists forecast.
A key question among analysts has been how a sudden lurch higher in gasoline prices at the pump is affecting consumers' spending habits. A gallon of regular at the pump costs $3.93 on average nationwide, which is 32 cents more than drivers paid last year, according to the AAA Fuel Gauge Report.
Another report showed manufacturing in the Midwest region expanded at a slightly slower pace in March than in the month prior. These data from the Institute for Supply Management come ahead of the more closely followed national report.
European blue chips jumped 1%, the English FTSE 100 gained 0.46% to 5768 and the German DAX rallied 1% to 6947.
In Asia, the Japanese Nikkei 225 fell 0.31% to 10084 and the Chinese Hang Seng dipped 0.26% to 20556.