Kate Gibson
MarketWatch

NEW YORK: U.S. stocks on Friday snared their biggest first-quarter gain in more than a decade, after a better-than-anticipated rise in consumer confidence and spending boosted views of the economy.

The Standard & Poor’s 500 index rise of 12 percent in the first quarter would represent “a stunning year, and is even more so as a quarter,” said Marc Pado, U.S. market strategist at DowBull.com.

“But I do think it’s a comeback from an underexposed level for institutions; they were so scared they were hiding in defensive issues, and are now looking for opportunities to make money and not just hide. That shift alone has also helped move markets higher.”

Up 8.1 percent for the quarter, the Dow Jones industrial average rose 66.22 points on Friday, or 0.5 percent, to 13,212.04, sealing its best first-quarter point gain in its history.

“There is a general sense that we’ve gotten past the worst of the European crisis and the U.S. economy is gaining momentum,” said Alan

Skrainka, chief investment officer at Cornerstone Wealth Management.

“People are embracing the idea that maybe it is safe to go back into the stock market again,” he added.

The S&P 500 climbed 5.19 points, or 0.4 percent, on Friday to end the quarter at 1,408.47, its biggest first-quarter advance since 1998.

Energy, health care and consumer staples rose the most among its 10 major industry groups, with the latter two “indicating a somewhat defensive tone,” said Michael Sheldon, chief market strategist at RDM Financial.

“Today is the last day of the quarter, so there are the cross currents between under-invested portfolio managers and those taking profits after a fairly decent run-up in the market so far this year,” Sheldon said on the end-of-quarter positioning.

“There’s often a lot of selling of positions that didn’t quite work out, and end-of-quarter window dressing, with some shelling out a major position in Apple, of course,” said Cornerstone’s Skrainka. “A lot of managers have a lot of egg on their face since they didn’t own the stock,” he added of the technology company’s 48 percent climb so far this year.

Shares of iPhone and iPad maker Apple Inc. dropped 1.7 percent on Friday.

The tech-heavy Nasdaq composite fell 3.79 points, or 0.1 percent, to 3,091.57, leaving it up 18.7 percent for the first quarter.

Oil prices finished at $103.02 a barrel on the New York Mercantile Exchange. Gold futures for June delivery gained $17, or 1 percent, to end at $1,669.30 an ounce on the Comex division of the Nymex.

Euro-area finance ministers agreed on Friday to raise their financial firewall to 700 billion euros or $934 billion in dollars in their latest effort to contain the region’s debt crisis.

“Europe has lent banks a trillion euros, which should provide a backstop over the next several quarters. That has taken a certain amount of systemic risk off the table, at least for now,” noted Sheldon.

Friday’s economic reports had the Commerce Department reporting spending rose 0.8 percent in February as income climbed 0.2 percent.

And the University of Michigan and Thomson Reuters said consumer sentiment in March climbed to its highest level in more than a year, as Americans gained more confidence about their economic conditions.

Separately, a read on business activity in the Chicago area decelerated in March, but remained above 60 percent for a fifth consecutive month.

“There’s a general sense that we’ve gotten past the worst of the European crisis and the U.S. economy is gaining some momentum. We’re seeing more confidence on the part of investors, and that’s why they are coming into the market,” Skrainka said.

Among stocks in the news, Global Payments Inc. was down $4.73 at $47.50. The Wall Street Journal reported that the credit-card transaction processor is responsible for a cardholder security breach.

Best Buy Co. Inc. was down $1.09 at $23.68. Shares of the electronics retailer continued to fall a day after it saying that it will close 50 of its U.S. big box stores in 2013.

Gap Inc. was up 4 cents at $26.14. A Janney Capital Markets analyst raised the retailer’s stock rating to “Buy,” saying that its spring lineup is driving sales.

On the Nasdaq, Research In Motion Ltd. was up 97 cents at $14.70. The BlackBerry maker said it will focus its business on its corporate customers after failing to win over high-end consumers.

Finish Line Inc. was down $4.12 at $21.22. The sneaker and athletic clothing retailer’s fourth-quarter profit rose, but its first-quarter outlook was below expectations. Xyratex Ltd. was down $1.91 at $15.91. The data storage provider said first-quarter profit more than doubled, but revenue was short of expectations.