- Joined
- Jan 6, 2013
- Messages
- 403
- Points
- 0
S&P 500 Climbs Above 1,700 on Stimulus Bets, Economy
<cite class="byline" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 11px; vertical-align: baseline; background-color: transparent; width: 640px; color: rgb(111, 111, 111); display: block; font-style: normal; line-height: 1.3em; position: static !important; background-position: initial initial; background-repeat: initial initial;">By Lu Wang - Aug 1, 2013 11:53 PM GMT+0800</cite>
Richard Drew/AP Photo
Specialists Peter Kennedy, Bernard Wheeler, and Philip Finale, confer on the floor of the New York Stock Exchange on July 31, 2013.
U.S. stocks rallied, sending the Standard & Poor’s 500 Index above 1,700 for the first time, after central banks vowed to maintain stimulus and data on global manufacturing beat forecasts.
All 10 S&P 500 main industries advanced. MetLife Inc. rose 4.8 percent on better-than-estimated operating earnings. Procter & Gamble Co. gained 1.5 percent after posting profit that topped analysts’ estimates. DreamWorks Animation SKG Inc. jumped 6.2 percent as earnings surged. Exxon Mobil Corp. slid 2.3 percent as profit fell for the first time in four years.
The S&P 500 rose 1 percent to 1,702.93 at 11:52 a.m. in New York. The Dow Jones Industrial Average advanced 121.80 points, or 0.8 percent, to a record 15,621.34. Trading in S&P 500 (SPX) stocks was 3.9 percent above the 30-day average during this time of day.
“The tone from central banks is that the economy is a little better, but has not reached the escape velocity yet without monetary support,” Michael Vogelzang, president and chief investment officer at Boston Advisors LLC, which manages $2.6 billion, said by phone. “As long as there is strong accommodative policy, the market can go up a lot. The market is driven by Fed policy and good corporate earnings.”
The Fed said yesterday that persistently low inflation could hamper the economy and pledged to keep buying $85 billion in bonds every month. The statement came as data showed the U.S. economy grew more than projected in the second quarter. European Central Bank President Mario Draghi said today that recent economic indicators signal that the euro region is through the worst and reiterated that officials plan to keep interest rates low for the foreseeable future.
Fed Stimulus
Three rounds of bond purchases by the Fed, coupled with improving earnings and economic growth, has helped propel the S&P 500 up more than 150 percent from its bear-market low in 2009. Speculation about the Fed’s monthly bond purchases has whipsawed stocks since May, when Chairman Ben S. Bernanke first indicated policy makers could begin reducing the stimulus this year if the job market continues to improve.
Investors poured $38.1 billion into exchange-traded funds listed in the U.S. last month, the most since December 2008 and the fourth-highest inflow ever, according to data compiled by Bloomberg since 2000. Almost $30 billion of the deposits went to funds that buy and sell American equities.
The benchmark index gained 5 percent in July, its biggest monthly advance since January. The gauge is trading at 15.4 times estimated earnings, compared with an average valuation of 13.9 times profit over the past five years, according to data compiled by Bloomberg.
Economic Reports
Manufacturing in the U.S. expanded at the fastest pace in more than two years as orders and production jumped, according to the Institute for Supply Management’s factory index. Separate reports overseas showed manufacturing grew more than forecast in China and Europe.
In the U.S., applications for unemployment insurance payments declined by 19,000 to 326,000 in the week ended July 27, the fewest since January 2008, the Labor Department reported today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for 345,000.
Labor Department data tomorrow may show U.S. employers added 185,000 people to payrolls in July, as the jobless rate fell to 7.5 percent from 7.6 percent, according to Bloomberg surveys of more than 80 economists.
Earnings Season
Some 40 companies in the S&P 500 report results today. Of the 373 companies in the gauge to have already reported quarterly results, 73 percent have exceeded analysts’ profit estimates and 56 percent have beaten sales projections, data compiled by Bloomberg show.
The Chicago Board Options Exchange Volatility Index (VIX), or VIX, slipped 4 percent to 12.91 today. The equity volatility gauge reached its highest level this year in June and has since fallen 37 percent.
Companies whose growth is most tied to economic swings led today’s rally. The Morgan Stanley Cyclical Index rose 1.7 percent. The Dow Jones Transportation Average surged 2.6 percent to a record, while the Midcap 400 Index and the Russell 2000 (RTY) Index for smaller companies hit all-time highs, climbing 2.1 percent and 1.2 percent, respectively.
Financial Shares
The KBW Bank Index (BKX) rallied 1.9 percent as all its 24 members gained. Bank of America Corp. climbed 2.4 percent to $14.94. MetLife jumped 4.8 percent to $50.76. The largest U.S. life insurer said earnings, which exclude some investment results, were $1.44 a share. That beat the $1.33 average estimate of 20 analysts surveyed by Bloomberg.
Procter & Gamble rose 1.5 percent to $81.48. Earnings beat analyst forecasts, giving Chief Executive Officer A.G. Lafley some breathing room as he works to turn around the company he rejoined two months ago.
DreamWorks (DWA) climbed 6.2 percent to $26.28. The independent film studio run by Jeffrey Katzenberg reported a 75 percent surge in profit, driven by the hit movie “The Croods.”
Industrial companies rose 1.5 percent as a group. Quanta Services Inc. jumped 3.7 to $27.81. The biggest U.S. power line contractor exceeded analysts’ estimates for a ninth straight quarter, according to data compiled by Bloomberg. The company boosted its full-year forecast.
Yelp Soars
Yelp (YELP) Inc. soared 22 percent to $50.94. The company, whose website compiles consumer-business reviews, said second-quarter sales climbed 69 percent to $55 million, topping the $53.3 million average analyst prediction compiled by Bloomberg.
Sturm Ruger & Co. increased 5 percent to $53.40. The largest publicly traded U.S. firearms maker said second-quarter net income jumped 79 percent as revenue surged 50 percent to $179.5 million.
CBS Corp. gained 3.3 percent to $54.60. The owner of the most-watched U.S. TV network said second-quarter profit rose 11 percent, spurred by higher rates from pay-TV systems and new Internet streaming agreements.
Exxon Mobil (XOM) dropped 2.3 percent to $91.60. Second-quarter profit fell as crude oil prices declined along with returns from its gasoline and diesel manufacturing business. Brent crude futures, a global benchmark, averaged $103.35 a barrel during the second quarter, down 5 percent from $108.76 a year earlier.
To contact the reporters on this story: Lu Wang in New York at [email protected]
To contact the editors responsible for this story: Lynn Thomasson at[email protected]
