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Consumers' open wallets keep Wall Street bulls hoping for more; Disney shares reach highest since 2000

April 29, 2010 |  4:56 pm

Betting against the American consumer is one of the biggest mistakes Wall Street bears have made this year.

Despite the miserable employment picture, consumers -- or at least those who still have jobs -- picked up their spending pace in the first quarter.

Shoppers The government is expected to report Friday that personal consumption expenditures rose at a 3.3% annualized rate in the first quarter, up from 1.6% in the fourth quarter and the fastest pace since the first quarter of 2007, according to a survey of economists by Bloomberg News.

Of the 10 major stock sectors within the Standard & Poor’s 500 index, the best performer over the last three months has been the consumer-discretionary sector, which includes many retailers, restaurant chains, entertainment companies and hotel operators. The average stock in the group is up 22.7% in the  period, compared with a 12.4% rise for the S&P 500 overall.

If the consumer is about to run out of gas the bears might yet be vindicated. But the action Thursday in some classic discretionary-spending sector stocks shows that Wall Street believes Americans will keep their wallets open for a while.

Retail stocks hitting new 52-week highs included Sears Holdings, AutoZone and OfficeMax.

Shares of cable TV companies Comcast Corp. and Time Warner Cable Inc. jumped to 52-week highs after both firms reporting better-than-expected earnings, as more of their customers shelled out for high-speed Internet service.

Among hotel operators, Starwood Hotels & Resorts soared $3.02, or 5.7%, to $56.29, the highest since October 2007, after the company’s first-quarter earnings report topped estimates. Starwood said room demand at its nine hotel brands, including the W brand, “accelerated as we moved through the quarter, allowing us to beat expectations on robust top-line growth.”

Walt Disney Co. shares, meanwhile, hit their highest price in nearly a decade, climbing 93 cents, or 2.6%, to $37.22. The last time the stock was at this level was in November 2000.

Some Disney investors may be betting on a strong summer for the company’s theme parks. But the latest boost for the shares, now up 15.4% this year, could stem from anticipation of “Iron Man 2,” which opened overseas this week. The film will open in U.S. theaters May 7.

-- Tom Petruno

Photo: Shoppers in Chicago this month. Credit: Scott Olson / Getty Images