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Stocks closed higher posting a gain for the week after major gauges extended their rally as investors saw signs of economic strength and a break from inflation in the latest consumer spending and confidence reports. This lifted hopes that the Federal Reserve will stop increasing interest rates sooner rather than later. However, some investors worried that some of the data also pointed to a slowdown in U.S. economic growth.

Today, the Dow Jones industrial average closed up 67.56 or 0.6% to 11,278.61, the broader Standard & Poor’s 500 index closed up 7.28 points, or almost 0.6%, to 1,280.16, and the tech-laden Nasdaq composite closed up 12.13 or 0.6% to 2,210.37. For the week the Dow rose 1.2%, the S&P 500 advanced 1%, and the Nasdaq gained 0.8%.

Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by a margin of 23 to 9 on volume of 1.3 billion shares. On the Nasdaq, winners beat losers also by a margin of 17 to 11 as 1.5 billion shares changed hands.

While the data that has come out has been mixed, it appears that the sellers are gone and people are feeling better about the market. Personal incomes rose 0.5% in April but the increase was wiped out by a 0.5% rise in consumer prices. Core inflation, excluding food and energy rose 0.2% in April as expected after a 0.3% gain in March. In the last 12 months, this has risen 2.1%, the fastest gain since March 2005. Core inflation is now running slightly above the Federal Reserve’s informal “comfort zone” of 1% to 2%. After the personal income and spending report, the odds of a quarter percentage point increase in U.S. interest rates fell on the federal funds futures market. Additionally, U.S. consumer sentiment strengthened slightly with the UMich consumer sentiment index inching higher to 79.1 in line with expectations.

Shares in GM rose 18 cents to $28.08, buoyed by a second broker upgrade in three days. Prudential Equity Group lifted its recommendation on the auto maker to overweight from neutral, saying the stock is attractive for investors with a short-term time horizon. They believes the company’s share price will benefit from big year-on-year full-size-SUV sales increases, a strong take-up of its buyout offer by its employees, upward earnings-per-share revisions and a new labor deal all parties.

Shares of Merck closed up 17 cents at $34.56, after the drug giant said it received U.S. regulatory clearance for Zostavax, its vaccine to prevent shingles in people aged 60 and older. Shingles, that is caused by the chickenpox virus, most often occurs in older adults who contracted chickenpox earlier in their lives. Merck said that Zostavax will be priced at $145.35 a dose. About 1 million Americans fall ill with shingles every year.

Luxembourg steel manufacturer Arcelor SA in its attempt to fight off a hostile bid from Mittal Steel, has agreed to combine with Russian steelmaker Severstal in what could create the world’s leading steelmaker. This leaves the fate of Arcelor to its shareholders, who can still opt for Mittal Steel’s bid if they choose, at a meeting scheduled for June 28. This deal values the exchange at 44 euros a share. However, on this report, shares of Arcelor fell 4.2% to 32.64 euros, giving it a market capitalization of roughly $27 billion. Mittal Steel had last week increased its offer by 34%, valuing the steelmaker at 37.74 euros a share at the time of the offer.

The casino operator Las Vegas Sands closed up $5.96 or 9% to $69.63, after it was selected to build and run a casino in Singapore. The drug-maker Celgene closed up $1.02 or over 2% to $41.46, after it won approval from the FDA for its drug Thalomid as a treatment for a form of blood cancer.

U.S. light crude oil for July delivery settled 5 cents higher at $71.37 a barrel in shortened trade on the New York Mercantile Exchange. Crude ended 3% higher for the week.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter