NEW YORK — Consumer confidence has reached a three-year high and it sent an upbeat wave through Wall Street on Tuesday.
The Conference Board's Consumer Confidence Index rose again in June, following the uptick in May. The index is at 105.8, up from 103.1 last month. Both components of the index showed signs of strength in June. The present situation index rose to 120.7 from 117.8, while the expectations index inched up to 95.8 from 93.4 in May.
The improvement in consumers' moods helped stocks rally, after last week's selloff due to higher crude oil prices. All three major indices rose during Tuesday's trading session. The Dow Jones Industrial Average gained 114.85 points, or 1.12 percent, to close at 10,405.63. The Nasdaq Composite climbed 24.69, or 1.21 percent, to close at 2069.89, while the S&P 500 Index rose 10.88, or 0.91 percent, to end Tuesday's session at 1,201.57.
"This month's gain in consumer confidence has propelled the index to a three-year high," observed Lynn Franco, director of the Conference Board's Consumer Research Center, in a statement. "The improvement in consumers' mood suggests that business activity and labor market activity will continue to pick up over the next several months. And, with consumers in better spirits, and job concerns remaining relatively steady, there is little reason to expect a dramatic shift in consumers' spending."
June's increase represents the second consecutive gain in the overall Index following three months of consecutive declines.
The index indicated that consumers' appraisal of current conditions improved this month. Their outlook concerning employment also indicated a more upbeat mood.
Consumers who said jobs were "hard to get" decreased to 22.6 percent from 24.1 percent, while those claiming jobs are "plentiful" was essentially unchanged at 22.6 percent. According to data from the Conference Board, June's results were the first time in nearly three years that the percentage of consumers saying jobs are "hard to get" didn't exceed the percentage of those concluding that jobs are "plentiful."
There also was some potentially good news for retailers, as consumers' expectation of increasing wages indicated they might continue their shopping spree over the next six months. The proportion of consumers anticipating their incomes will increase in the months ahead jumped to 19.4 percent from 17.8 percent last month."While the perception of current conditions is at a 20-year high, consumers still view the future with more skepticism. As such, it is challenging to make the definitive consumer spending call," wrote Emme Kozloff, analyst at Sanford C. Bernstein & Co., in a research note. "Nonetheless, this month's positive move in confidence is encouraging, particularly given the continued increase in energy prices."
The analyst noted that results were mixed by income level. Consumers with annual household incomes between $35,000 to $50,000 were the most optimistic, rising 11.4 percent, while those between $25,000 and $35,000 rose 7.1 percent. Lower income groups were less optimistic, with results "flattish to negative," the analyst wrote.
By geography, the most optimistic consumers were from the Middle Atlantic region, which spiked by 23.6 percent. Coming in second was the West North Central region, up by 7.2 percent. The Mountain area came in third, rising 6.8 percent. Of the nine geographic divisions, the area showing the least gain was the Pacific region, up by just 0.8 percent.
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