NEW YORK – Wall Street extended its rebound to a third session Friday, ending with a moderate advance after personal consumption data bolstered the outlook for the economy and interest rates.
Investors were upbeat about a Commerce Department report that income and spending rose in April, helped along by improved wages that kept consumers buying at stores. The change in core prices — excluding energy costs — also tailed off slightly to advance 0.2 percent last month.
The Dow Jones industrial average jumped 67.56, or 0.6 percent, to 11,278.61. The Dow gained 180 points since Wednesday.
Broader stock indicators advanced. The Standard & Poor's 500 index rose 7.28, or 0.57 percent, to 1,280.16; the Nasdaq composite index added 12.13, or 0.55 percent, to 2,210.37, returning to positive territory for the year.
But while the annual inflation rate edged up to 2.1 percent to sit just outside of the Federal Reserve's targeted range, signs of easing demand in this week's data showed the economy is headed for a more manageable rate of expansion. That suggests the inflationary pressures are not as bad as feared, and that the Fed might not need to raise rates further, said Michael Strauss, chief economist of Commonfund.
"We're seeing an economy that's transitioning from a very strong first quarter to what appears to be some sluggishness in the second quarter," Strauss said. Recent data "provides signs that the consumer is slowing down. Maybe the Fed doesn't need to do much more."
Fewer existing home sales and a sharp drop in durable goods orders this week drove hopes that the Fed has raised lending rates enough to keep the economy from speeding off. A broker's upgrade of General Motors Corp. (GM) also gave the market a boost in Friday's session.