Thomson Reuters and University of Michigan index of consumer sentiment increased to 83.7 from 76.4 in April, it is the highest since July 2007. Separately, the Conference Board’s gauge of the economic outlook for the next three to six months climbed 0.6 percent in April, more than forecast.
The gain in confidence shows Americans are overcoming the effects of higher taxes and a package of federal spending cuts, known as sequestration, that threatens to take a toll on jobs. Stocks rallied as the reports underscored forecasts for a pickup in the economic expansion later this year.
The Standard & Poor’s 500 Index jumped 1 percent to a record 1,666.12 at the close of trading in New York. The Dollar Index climbed as much as 0.9 percent to 84.371, the highest level since July 2010, before trading at 84.261 at 4:07 p.m. New York time, up 0.8 percent. The yield on the 10-year Treasury note climbed to 1.95 percent from 1.88 percent late yesterday.
A report from the Labor Department showed payrolls climbed in 30 states in April, while the unemployment rate dropped in 40, showing the labor market strengthened across the country.
The economy is projected to grow at a 1.6 percent annual rate in the second quarter, down from a 2.5 percent annual rate in the first three months of the year, based on the median forecast in a Bloomberg economist survey from May 3 to May 8. The expansion is then projected to accelerate to a 2.6 percent pace in the fourth quarter.
Source Bloomberg
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