NEW YORK, May 27 (Xinhua) — U.S. stocks expanded gains on Friday ahead of the long Memorial Day weekend as surging commodity prices overcame disappointing economic data.
European Central Bank Governing Council member George Provopoulos said that Greece might deal with its debt problem if it sticks to the aid program. That comment, which was considered as bullish by investors, drove the U.S. dollar weaker and led commodity prices surge on Friday.
The stock market was driven by higher commodities prices, with thin trading volume ahead of the Memorial Day holiday, despite somewhat disappointing economic data on Friday.
The Commerce Department said that both personal income and spending rose 0.4 percent in April, in line with market estimates. However, the rise in spending was the smallest in three months, suggesting the consumption situation was still weak.
Meanwhile, pending home sales dropped 11.6 percent in April. The reading was a seven-month low. The market expectation was a drop of 1 percent.
Moreover, the Thomson Reuters/University of Michigan Consumer Sentiment index came in above analysts’ estimates. Concerns about higher gas prices and inflation had knocked the gauge down in March and April.
Despite those disappointing data, analysts still held a bullish view toward the stock market. “Despite our near-term caution, we continue to see the S&P 500 reaching 1400 over the coming year,” Alec Young, equity strategist of S&P Equity Research told Xinhua.
According to Alex, while recent macro headwinds were raising questions about the sustainability of recent earnings momentum, he still believed that a downside trend of market was fairly limited and that the current weakness is more likely to be a correction, rather than the beginning of a new bear market.”In our view, 2011 estimated EPS would have to be excessively optimistic to justify a bear market,”he added.
The Dow Jones industrial average added 38.82 points, or 0.31 percent, to 12,441.58. The Standard & Poor’s 500 was up 5.41 points, or 0.41 percent, to 1,331.10. The Nasdaq Composite Index rose 13.94 points, or 0.50 percent, to 2,796.86.