Consumers Fuel S&P

The stock market cheered the American consumer Thursday.

In all their debt-laden, energy-guzzling glory, consumers were the only thing standing between the economy and a negative growth rate in the first quarter. With an eye to Friday's nonfarm payrolls report, investors drove the S&P 500 to another record with the confidence that if Americans have jobs, they'll keep emptying their wallets.

Although first-quarter GDP was revised down to a 0.6% pace, the markets barely blinked because the U.S. consumer put forth the strongest showing since the first quarter of 2004. The government revised personal spending up to 4.4%, from an initial estimate of 3.8%. Consumption added 3% to GDP in the quarter.

Retail stocks outperformed Thursday as the S&P 500 finished off its highs of the day, but up just over 1 point to set another record at 1530.62. The Dow Jones Industrial Average ended the day down a hair, or 5 points, at 13,627.64, and the Nasdaq Composite gained 0.5% to close at 2604.47. The NYSE Composite Index, the Russell 2000 and the Dow Jones Transportation Average closed the day at new all-time highs.

As if on cue, Prudential's ultra-bullish equity strategist Ed Keon published a note Thursday evening reiterating a forecast that the S&P 500 will end the year at 1650, adding taht it could go to 2000 by 2009.

Keon recommends the brokers, which also outperformed Thursday on news that Wachovia(WB Quote) is buying A.G. Edwards(AGE Quote) for $6.8 billion. The Amex Securities Broker Dealer Index rose 2.8% on the day.