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Stocks open higher, but consumer confidence may lag behind

Monday, August 24, 2009 | 11:25 a.m. CDT

NEW YORK — Investors are building on last week's momentum that sent major indexes to their highest levels of the year, pushing stocks higher in early trading.

The moderate advance Monday follows gains in overseas markets. Oil and other commodities are higher, while Treasury prices are mostly lower ahead of the government's latest round of auctions.

Investors were encouraged by Federal Reserve Chairman Ben Bernanke's declaration Friday that the economy is on the verge of recovery. Though there are no major economic reports scheduled for Monday, later this week traders will look to data on housing and the consumer to determine if Bernanke's upbeat view can be backed up by actual activity.

There have already been signs of recovery in the battered housing market. But consumers are still struggling. Analysts say the market may drift ahead of the consumer confidence data.

On Tuesday, the Conference Board releases its monthly consumer confidence index. Reuters and the University of Michigan report their final consumer sentiment figures for August on Friday.

"The consumer is still scared," said Ryan Detrick, chief technical strategist, Schaeffer's Investment Research. "We still think there is a lot of fear out there."

Improved consumer confidence and spending is widely seen as one of the keys that could help end the recession. Consumer spending accounts for more than two-thirds of all economic activity.

In early trading, the Dow Jones industrial average rose 40.05, or 0.4 percent, to 9,546.01. The Standard & Poor's 500 index rose 5.19, or 0.5 percent, to 1,031.32, while the Nasdaq composite index rose 5.91, or 0.3 percent, to 2,026.81.


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