NEW YORK – Maybe American consumers are better off than anyone thought.

An unexpected jump in consumer confidence and slight gains in Americans’ spending and income helped push stocks higher for the third day in a row Friday.

The Thomson Reuters/University of Michigan Consumer Sentiment index rose to 74.3 in May, above analysts’ estimates of 70. Concerns about higher gas prices and inflation knocked the gauge down in March and April.

Gas prices have come down in May after reaching nearly $4 last month, giving a lift to the closely watched measure of consumer confidence.

“That’s what a 25-cent drop in gas prices will do,” David Ader, bond strategist at CRT Capital Group, wrote in an email to clients.

That dip isn’t accounted for in the latest consumer spending figures from the Commerce Department, because its numbers lag by a month. Both personal income and spending rose 0.4 percent in April, in line with what economists expected. Higher prices for food and gas made up most of the increase in consumer spending, which practically ate up the income gains.

The Dow Jones industrial average rose 62 points, or 0.5 percent, to 12,464. The Standard & Poor’s 500 index rose 6 points, or 0.5 percent, to 1,332. The Nasdaq composite rose 15 points, or 0.5 percent, to 2,797.

Marvell Technology Group Ltd. jumped 10 percent. The maker of chips for data-storage and Blackberry’s smartphones reported a slight drop in earnings. But Marvell’s CEO forecast higher sales in the current quarter.

Another chipmaker, Broadcom Corp. rose 5 percent, the most of any stock in the S&P 500. FBR Capital Markets said Broadcom should benefit from growing demand for smartphones and put the company on its list of top picks.

CVS Caremark Corp. rose 2 percent after the pharmacy benefits company won a three-year contract from the Blue Cross Blue Shield Federal Employee Program.

All three major stock indexes remain down slightly for the week, and declined for each of the three weeks before that. Stocks took a hard fall Monday with a batch of bad news from Europe. Another downgrade of Greece’s weak credit rating, a warning on Italy’s debt and a defeat of Spain’s ruling party deepened worries about Europe’s debt crisis.

Stocks hit their highest levels of the year April 29 following a strong run of corporate earnings. The S&P 500 has lost 2.4 percent since then as Greece struggles to avoid default and U.S. economic forecasts were revised lower, partly due to high gas prices.

Trading was thin ahead of the holiday weekend. Markets will be closed Monday for Memorial Day.

NEW YORK (Reuters) – Signs of a Wall Street sell-off are all over the place, but U.S. stocks might well survive another week relatively unscathed if investors keep betting on sectors less vulnerable to an economic downturn.

Pressure for a correction in the stock market has been building up in the past few weeks as the euro and oil prices fell in tandem, knocking down shares of energy companies and dollar-sensitive multinationals.

Still, investors have averted a broad sell-off by diving into shares of companies that are less vulnerable to the economic cycle, including well-known defensive sectors such as utilities and household products, but also large-cap companies with steady earnings performance.

That strategy may hold the market afloat for a little longer. But with the end of the Federal Reserve’s easy money policies just around the corner, investors are becoming more sensitive to risk in general.

“There is good reason for a pause, there is good reason to be conservative in here, and there is good reason to raise some cash ahead of a summer correction and a better buying opportunity,” said Richard Ross, global technical strategist with Auerbach Grayson in New York.

The sharp sell-off in commodities markets earlier this month was seen by many as the first warning sign of a coming market correction. The U.S. dollar has been strengthening since then, in another sign that appetite for risk is dwindling.

Next month’s end of the Fed’s massive bond-buying program, also known as quantitative easing, is expected to knock down the value of stocks, commodities and the euro, a recent Reuters poll of 64 analysts and fund managers found.

CONSUMER STAPLES BACK IN STYLE

Ross, who believes that a correction could come at any moment, warned that Wall Street remains close to multi-year highs as investors head into a traditional period of weak seasonality that stretches from May to November.

The Standard & Poor’s 500 index (.SPX) has kept its year-to-date gain of 6 percent for the past two weeks, as defensive sectors such as utilities advanced while more volatile technology shares posted losses.

Despite the rotation between sectors, the S&P 500 has been trading in a narrow range between 1,330 and 1,340, indicating Wall Street’s lack of direction. Most technical analysts agree that the market is poised to break out of that range soon — either with a sell-off or a rally.

Robert Sluymer, an analyst with RBC Capital Markets, said there is no technical evidence that the current market cycle has peaked. He recommended investors keep building exposure to defensive themes, while getting out of cyclical stocks.

Among the defensive sectors favored in the current environment, Standard & Poor’s Equity Strategy recommended the stocks in the S&P 500 Consumer Staples Index (.GSPS). For the week, this index was up 0.6 percent.

With the earnings season coming to a close, Wall Street will have just a sprinkling of marquee names set to release quarterly results in the coming week. On tap are earnings from Campbell Soup (CPB.N), Costco Wholesale Corp (COST.O) and HJ Heinz Co (HNZ.N), whose stocks are in the S&P 500 Consumer Staples Index. Preppies, take note: Polo Ralph Lauren Corp (RL.N) and Tiffany & Co (TIF.N) are also set to release their results. These companies’ outlooks could shed light on the

consumer’s mindset and headwinds facing the retail sector.

As far as economic indicators are concerned, there’s no data with overwhelming star power. The calendar includes new home sales for April, a second look at first-quarter gross domestic product, personal income and consumption for April and the final reading for May on consumer sentiment from the Thomson Reuters/University of Michigan Surveys of Consumers.

So investors could very well be at the mercy of the headlines from Europe, where fears about a possible debt restructuring by Greece are on the rise.

With the euro, commodities and stocks trading with extraordinary correlation, investors should look at the euro-dollar trade for direction, said Ross of Auerbach Grayson.

“If you continue to see the dollar strengthening,” he said, “it should provide a headwind for commodities and for the S&P.”

(Editing by Jan Paschal)

NEW YORK – The Dow Jones industrial average appears poised to open higher after retail giant Wal-Mart posted healthy net income for the quarter.

Wal-Mart Stores Inc., one of 30 companies in the Dow average, said Tuesday that net income rose 3 percent in the first quarter. The results beat Wall Street expectations.

Home Depot Inc. and Hewlett Packard Co., two other members of the Dow, also reported results Tuesday. Home Depot says net income jumped 12 percent in the first quarter. Hewlett Packard says profits rose in the most recent quarter, but it’s lowering its outlook for the rest of the year.

Dow futures are up 16, or 0.1 percent, to 12,525. S&P 500 futures are up 2, or 0.2 percent, to 1,328. Nasdaq 100 futures are up 1 to 2,335.

LONDON – Rising inflation around the world weighed on stock markets Friday as investors wondered how fast central banks will raise borrowing costs to counter the threat of rising prices, while the euro was undermined by ongoing worries that Greece will have to restructure its massive debts.

Figures Friday reinforced market expectations that both the European Central Bank and the People’s Bank of China will soon be raising interest rates again to counter rising inflation.

In China, figures showed consumer prices rose 5.4 percent in the year to March, up from February’s 4.9 percent. The increase was largely driven by surging food costs and represents a setback for the government, which has boosted interest rates four times since October to cool prices.

Analysts expect the People’s Bank to enact further measures in the days to come in response to those figures.

They also think that the ECB will raise rates again in June after figures showed inflation in the 17-country eurozone revised up to 2.7 percent in the year to March from the preliminary estimate of 2.6 percent, largely because of rising fuel costs.

The increase is likely to cause some concern for rate-setters at the European Central Bank, who are tasked with keeping inflation “close to but below” 2 percent. Last week, the European Central Bank raised its benchmark rate by a quarter of a percentage point to 1.25 percent, its first increase in nearly three years, because of concerns of rising inflation rates.

The euro failed to make much headway considering the inflation numbers as the currency was dogged by mounting concerns that bailed-out Greece will end up having to restructure its debts. Another credit rating downgrade of Ireland by Moody’s also stoked concerns that Europe’s debt crisis still has a way to play out.

By late morning London time, the euro was 0.3 percent lower on the day at $1.4455.

“The eurozone debt and banking crisis is back on the agenda and it looks as if EU policymakers will be eventually forced to consider debt restructuring as well as bank recapitalisation otherwise the problem will continue to fester,” said Neil MacKinnon, global macro strategist at VTB Capital.

Those debt crisis concerns have not hit the euro too hard over the past few weeks, as investors have been more focused on the ECB’s interest rate policy. Earlier this week, it jumped above $1.45 for the first time in 15 months.

Many analysts think that interest rates will remain the main driver of the euro’s fortunes for a while yet, especially as the Fed is not expected to start raising rates anytime soon — that means investors see the prospect of bigger and rising returns if they hold the euro.

The theme of rising inflation around the world will continue through Friday as attention turns to U.S. numbers for March. These are expected to show consumer prices rose by 2.6 percent in the year to March, up from the previous month’s 2.1 percent.

However, unlike the People’s Bank of China and the European Central Bank, the U.S. Federal Reserve is not anticipated to start increasing interest rates anytime soon, partly because it has a dual mandate of looking at the jobs market as well as prices.

There’s a whole host of other U.S. economic data later to keep investors interested, including the monthly Empire State survey of manufacturing conditions around the New York region and the University of Michigan’s latest assessment of consumer confidence.

Ahead of that U.S. data flood, stocks have traded in fairly narrow ranges.

“Further direction will be provided by a whole host of indicators due later in the day,” said Ben Critchley, a sales trader at IG Index.

In Europe, the FTSE 100 index of leading British shares was up 0.2 percent at 5,974.44 while Germany’s DAX rose 0.4 percent to 7,174. The CAC-40 in France was down 0.2 percent at 3,965.

Wall Street was poised for a modest retreat at the open though that could change in the wake of the data — Dow futures were down 0.2 percent at 12,203 while the broader Standard & Poor’s 500 futures fell a similar proportion to 1,308.

Earlier in Asia, Hong Kong’s Hang Seng Index fell less than 0.1 percent to close at 24,008.07.

Despite the inflation figures, China’s Shanghai Composite Index staged a late rally to finish 0.3 percent higher at 3,050.53.

Japan’s Nikkei 225 stock average fell 0.7 percent to end at 9,591.52 while South Korea’s Kospi ended down less than 0.1 percent to close at 2,140.50.

Benchmark oil for May delivery fell 43 cents to $107.68 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.00 to settle at $108.11 per on Thursday.

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Kelvin Chan in Hong Kong contributed to this report.

NEW YORK – Stocks are rising at the opening of trading after JPMorgan Chase & Co.’s earnings beat expectations and a report showed shoppers spent more for the ninth straight month.

JPMorgan Chase on Wednesday was the first big bank to report first-quarter results. Net income jumped 67 percent to $5.56 billion, or $1.28 per share. Analysts expected just $1.15 in earnings per share.

Retail sales rose 0.4 percent in March from February, the ninth consecutive gain. Much of the increase went to higher gasoline costs.

The Dow Jones industrial average is up 53 points, or 0.4 percent, to 12,317. The S&P 500 is up 5, or 0.4 percent, to 1,320. The Nasdaq composite is up 17, or 0.6 percent, to 2,761.

China’s Shanghai stock index rose 1.1% on Wednesday, topping a key 3,000-point level for only the second time since November, on the heels of emerging-market equities notching their first monthly gain of the year in March.

Still, analysts say it’s too early to tell if there’s a rally in the making for emerging markets. And there are reasons to be cautious.

Global inflation and the impact of Japan’s earthquake loom over emerging markets. Also, how much longer Beijing will tighten to tame inflation is unclear.

Including Wednesday’s gains, the MSCI emerging-market index is now up 4.3% in 2011. Emerging-market stocks rose 5.7% in March, after falling the first two months. Rising oil prices, meanwhile, have hurt growth forecasts in the developed world.

“There’s been a cool-down in optimism on developed markets while there’s a wait-and-see mode in emerging markets,” said Kate Moore, a senior global equity strategist at Bank of America/Merrill Lynch.

Inflows to developed-market equity funds jumped in Q1. But EM funds bounced back in late March. They posted only their second week of inflows since the second half of January, says research firm EPFR Global.

“Flows out of emerging markets appear to be stabilizing,” said Pablo Goldberg, head of EM research at HSBC. “Inflation is still a concern, but policymakers are focusing on it more acutely than before.”

Emerging-market stocks began falling on worries over soaring food prices and government tightening measures. They swooned further when unrest in Egypt and Libya drove up oil prices. Concerns linger over how Japan’s power disruptions will impact supply chains and Asian exporters.

Downturns in emerging-market stocks have been brief, including the big 1997 and 2008 sell-offs. Emerging markets churn out most of the world’s economic growth. Any bounce in emerging-market equities fuels hopes that the worst is over.

China Rising, Softly

China is key. The Shanghai bourse on Wednesday closed at 3,001, boosted by banking shares, as investors shrugged off Beijing’s fourth rate hike since late October. Amid hopes that China’s authorities are starting to get ahead of inflation, stocks have been moving higher since late January.

The Shanghai index is now up 6.8% in 2011. But the climb has come in low volume.

Samantha Ho, lead manager of the Invesco China Fund, says the 3,000 level is a key technical barrier.

“Sentiment is turning around, with the consensus expectation that monetary tightening in China is to end soon,” she said in an email. “Should the (3,000) barrier be broken, it is likely that we will see a higher trading range.”

China’s government has aimed to fight inflation without slamming the economy. Some economists say Beijing’s tactics are working, because money supply growth has slowed. While the economy is weakening, it’s still expected to grow 9% in 2011.

Aside from food and energy prices, rental costs and higher wages are driving up China’s inflation. Its boom in housing and property construction shows few signs of cooling.

“Beijing is not worried about tightening too much,” said Donald Straszheim of China Research ISI Group. “More tightening is coming because inflation is still too high.”

In a research note, Nomura analyst Chi Sun wrote: “We forecast a long, drawn-out PBC rate hiking cycle; the real cost of capital is still far too low.”

Among emerging-market ETFs, those invested in oil producer Russia have been top performers. In small caps, Russia and east Europe have excelled in the Russell emerging-market index.

Easy Credit Spurs Inflation Fear

While Russia has been a top performer, Brazil and India have lagged. In Brazil, the worry has been that its central bank is moving too slowly to combat inflation and that interest rates will jump.

Many emerging countries still have negative real rates, so credit growth is on the rise, says a Citigroup report.

Central banks in many emerging markets do not want to risk depressing their economies amid possible social unrest, says economist Ed Yardeni.

“They are likely to live with higher inflation, while continuing to tighten on a ‘too little, too late’ basis,” he said.

NEW YORK (Reuters) – Rising oil prices and tumbling bank shares dragged Wall Street lower on Friday, with stocks surrendering the previous session’s hefty gains.

Brent crude prices hovered near $116 a barrel as Libyan security forces began a violent crackdown on protesters in Tripoli and clashed with rebels near a major oil terminal.

Data earlier in the week had raised expectations about Friday’s employment report, lifting stocks to their biggest gains in three months on Thursday. But after Friday’s report showed February job gains roughly in line with expectations, investors quickly turned their focus to rising oil prices and Libyan unrest.

“The (market) battle is: has the economy turned in a permanent way, or are higher oil prices going to slow everything down,” said Bernie McGinn, president at McGinn Investment Management in Alexandria, Virginia.

The revolts in North Africa and the Middle East that have boosted crude prices, coupled with subdued client activity, could pressure first-quarter earnings of large U.S. banks, according to Bank of America Merrill Lynch. The brokerage downgraded shares of Citigroup Inc (C.N) and Goldman Sachs Group Inc (GS.N) to “neutral” from “buy.

Goldman fell 2 percent to $161.18 and Citi dropped 3.2 percent to $4.53. The KBW bank index (.BKX) lost 1.9 percent.

The Dow Jones industrial average (.DJI) lost 147.66 points, or 1.20 percent, to 12,110.54. The Standard & Poor’s 500 Index (.SPX) fell 15.40 points, or 1.16 percent, to 1,315.57. The Nasdaq Composite Index (.IXIC) dropped 24.70 points, or 0.88 percent, to 2,774.04.

Volume was light, with about 4.15 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq so far in the session.

U.S. payrolls rose by 192,000 in February, slightly above the 185,000 gain expected by a Reuters poll, and the unemployment rate unexpectedly dipped to 8.9 percent from 9 percent.

“Earnings and hours are not increasing, and people’s paychecks are not really increasing,” said Kim Caughey Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. “Without more cash in your pocket, there’s no way you can spend it.”

Among consumer-related shares, the homebuilding sector was hurt the most. The PHLX housing index (.HGX) fell 1.8 percent with Weyerhaeuser (WY.N) down 2.5 percent to $23.51 and KB Home (KBH.N), Ryland Group (RYL.N) and MDC Holdings (MDC.N) all down about 3 percent.

(Reporting by Rodrigo Campos; Editing by Kenneth Barry)

NEW YORK (Reuters) – Stocks extended losses and hit session lows on Friday as oil prices rose to their highest intraday price in nearly 2-1/2 years on increased violence in Libya.

The Dow Jones industrial average (.DJI) fell 56.42 points, or 0.46 percent, at 12,201.78. The Standard & Poor’s 500 Index (.SPX) lost 7.92 points, or 0.60 percent, at 1,323.05. The Nasdaq Composite Index (.IXIC) dropped 12.05 points, or 0.43 percent, at 2,786.69.

(Reporting by Chuck Mikolajczak)

NEW YORK (Reuters) – U.S. stocks dropped more than 1 percent on Tuesday as rising tensions on the Korean peninsula added to worries over how euro zone debt woes could affect domestic markets.

North Korea fired scores of artillery shells at a South Korean island, killing two soldiers and setting houses ablaze, and South Korea returned fire. The iShares MSCI South Korea Index Fund (EWY.P) fell 5.3 percent.

Global stock markets tumbled while the dollar climbed as the geopolitical tensions and worries over Ireland’s debt problems drove investors to the relative safety of the U.S. currency. Crude oil futures sank 1.4 percent.

“The prospect of armed conflict in Asia along with the debt problems on Europe are creating a lot of negative sentiment,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

The Dow Jones industrial average (.DJI) dropped 138.88 points, or 1.24 percent, at 11,039.70. The Standard & Poor’s 500 Index (.SPX) was down 15.94 points, or 1.33 percent, at 1,181.90. The Nasdaq Composite Index (.IXIC) slid 32.63 points, or 1.29 percent, at 2,499.39.

In the latest economic data, the U.S. economy grew faster than previously estimated in the third quarter, but still not enough to address stubbornly high unemployment. Also, existing home sales fell by more than forecast in October after two months of gains.

“The GDP data shows that the economy is certainly still growling, but the numbers weren’t big enough to disrupt the market’s focus on overseas events.” McCain said.

On the upside, Dow component Hewlett-Packard Co (HPQ.N) rose 1.2 percent to $43.75 a day after it raised its outlook and posted stronger-than-expected quarterly profit.

The European Union urged Ireland to adopt an austerity budget on time to unlock promised EU/IMF funding, while Irish Prime Minister Brian Cowen rebuffed calls for a snap election and insisted the budget would go ahead as planned on December 7.

European stocks fell nearly 1 percent to a 3-week low, led by declining banking shares. U.S.-listed shares of Bank of Ireland (IRE.N) sank 23 percent to $1.71, while HSBC Holding (HBC.N) fell 1.8 percent to $51.36.

Among South Korean companies, steelmaker Posco (PKX.N) sank 4.5 percent to $96.52.

Hormel Foods Corp (HRL.N) rose 3.4 percent to $49.54 after it reported higher-than-expected profit, while Campbell Soup Co (CPB.N) lost 0.7 percent to $34.57 after its earnings missed expectations.

Minutes of the Federal Reserve’s November 3 Open Market Committee meeting that included its decision for more quantitative easing will be released at 2 p.m. EST (1900 GMT).

(Editing by Jeffrey Benkoe)

LONDON (Reuters) – Stock index futures pointed to a higher open for European shares on Thursday after the Federal Reserve launched a fresh effort to support a struggling U.S. economy, committing to buy $600 billion in government bonds.

At 3:04 a.m. ET, STOXX Europe 50 futures were up 1.1 percent, Germany’s DAX futures were up 0.8 percent and France’s CAC-40 futures were up 1 percent.

The U.S. central bank said it would buy about $75 billion in longer-term Treasury bonds per month through the end of June 2011 and could adjust purchases depending on the strength of the recovery.

(Reporting by Brian Gorman)