Stocks climb after consumers bump up spending; Tobacco stocks rise on Supreme Court decision

Stocks edge higher after consumers spend more

NEW YORK — Stocks rose Monday after cautious consumers bumped up spending last month and the Supreme Court blocked a government effort to get money from tobacco companies.

The Dow Jones industrial average rose about 35 points in late afternoon trading. Broader indexes also advanced. Treasury prices rose, sending interest rates lower, as overall concerns remained about the economy.

The government said consumer spending rose 0.2 percent last month, just above the 0.1 percent growth forecast by economists polled by Thomson Reuters. Personal income rose 0.4 percent. A bigger jump in income than spending means consumers are choosing to save their money. Weak spending could hamper growth because consumer spending is the biggest driver of the economy.

Jim Swanson, chief investment strategist at MFS Investment Management in Boston, said the latest numbers on personal spending indicate that the recovery is proceeding but that government policymakers need to be careful about cutting back too quickly on the stimulus programs created after the 2008 financial crisis.

“Now is the time you keep spending because you don’t want to suddenly withdraw the caffeine that’s in the system,” Swanson said.

The tepid recovery has led some leaders around the world to push for new spending to bolster growth. But more government spending would make it difficult to control deficits and could drive up borrowing costs if investors worrying about defaults demand higher interest rates.

The G20, a group of rich and developing nations including the U.S., agreed over the weekend that industrialized nations would halve deficits by 2013. Leaders said, however, that they wouldn’t pull government support too quickly. There are concerns that the sudden drop in demand could short circuit a global rebound.

Some European nations have been pushing for steep spending cuts to avoid the kind of debt problems hitting Greece. The country required a European Union-led bailout to avoid defaulting. Concerns that losses on debt would spread and hurt a global recovery have hurt stocks since late April and pounded the euro, the currency used by 16 European countries.

Meanwhile, tobacco stocks rose after the Supreme Court said it wouldn’t take up a case between the government and tobacco makers. The decision prevents the government from getting billions of dollars from makers of cigarettes for anti-smoking campaigns. Reynolds American Inc. rose 4.7 percent, while Altria Group Inc., parent of Philip Morris USA, rose 3.8 percent.

A separate decision from the court signaled that gun control laws in Chicago and a nearby suburb likely would be struck down by a lower court. That gave a boost to shares of gun makers. Smith & Wesson rose 4.9 percent, while Sturm, Ruger & Co. climbed 1.2 percent.

In the final hour of trading, the Dow rose 35.29, or 0.4 percent, to 10,179.63. The broader Standard & Poor’s 500 index rose 2.38, or 0.2 percent, to 1,079.14. The Nasdaq composite index rose 8.01, or 0.4 percent, to 2,231.49.

Treasury prices rose, pushing down yields. The yield on the benchmark 10-year Treasury note fell to 3.03 percent from 3.11 percent late Friday. Treasurys often rise when investors are uncertain about the strength of the economy because they are stable investments that produce modest gains.

The euro fell to $1.2277.

Crude oil fell 61 cents to $78.25 per barrel on the New York Mercantile Exchange. A tropical storm in the Gulf of Mexico isn’t expected to hit the oil spill.

Reynolds American rose $2.43, or 4.7 percent, to $53.80, and Altria rose 74 cents, or 3.8 percent, to $20.44.

Smith & Wesson rose 20 cents, or 4.9 percent, to $4.30, while Sturm, Ruger & Co. climbed 18 cents, or 1.2 percent, to $15.24.

Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where volume came to 596 million shares compared with 737 million shares traded at the same point Friday. Volume is expected to remain weak in the coming days ahead of the July 4 holiday.

Britain’s FTSE 100 rose 0.5 percent, Germany’s DAX index gained 1.4 percent, and France’s CAC-40 rose 1.6 percent. Japan’s Nikkei stock average fell 0.5 percent.