By Nikolaj Gammeltoft & Alex Barinka - Jul 18, 2013 9:01 PM GMT+0530
Jin Lee/Bloomberg
Fed stimulus and better-than-forecast corporate earnings have fueled a surge in stocks worldwide, with the benchmark U.S. index jumping as much as 150 percent from its March 2009 low.
U.S. stocks rose, sending the Standard & Poor’s 500 index to an intraday record, amid better-than-estimated earnings and jobless claims as investors weighed testimony from Federal Reserve Chairman Ben Bernanke.
July 18 (Bloomberg) -- Fewer Americans than forecast filed applications for unemployment benefits as the effects of auto-plant shutdowns began to ebb. Jobless claims dropped by 24,000 to 334,000 in the week ended July 13, the fewest since early May, from a revised 358,000 the prior period, Labor Department figures showed today in Washington. Trish Regan, Dominic Chu and Michael McKee report on "In the Loop." (Source: Bloomberg)
July 17 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke comments on the central bank's asset purchases and the U.S. economy in testimony before the House Financial Services Committee in Washington. (Excerpts. Source: Bloomberg)
| Sponsored Links | |||||||
| Buy a link | |||||||
Morgan Stanley rallied 5.1 percent as stock-trading revenue bolstered profit. International Business Machines Corp. added 2.4 percent after raising its full-year earnings target. UnitedHealth Group Inc. jumped 5.2 percent after profit beat estimates as membership surged. Intel Corp. lost 3.5 percent after forecasting third-quarter sales that may fall short of some analysts’ predictions. EBay Inc. (EBAY) tumbled 6.5 percent after its forecast for third-quarter sales missed estimates.
The S&P 500 (SPX) gained 0.6 percent to 1,691.43 at 11:30 a.m. in New York, surpassing the previous intraday high of 1,687.18 set on May 22. The Dow Jones Industrial Averageadded 107.11 points, or 0.7 percent, to 15,577.63, also a record. Trading in S&P 500 stocks was 19 percent above the 30-day average at this time of day.
“Jobless claims were a little bit better than expected which gives some comfort,” Richard Sichel, who oversees about $1.9 billion as chief investment officer at Philadelphia Trust Co., said by phone. “We have more to hear from Bernanke, but based on what we’ve had heard already I think markets should breathe an extra sigh of relief that he made it clear that he is very willing to be flexible. And then you have earnings rolling full steam now so it becomes a stock-by-stock market.”
Broad Rally
Fed stimulus and better-than-forecast corporate earnings have fueled a surge in stocks worldwide, with the benchmark U.S. index jumping as much as 150 percent from its March 2009 low. Today’s S&P 500 rally pushed the estimated 2013 price-to-earnings ratio to 15.3, the highest since April 2010.
About 81 percent of stocks in the index traded above their average prices from the past 50 days as of yesterday, according to data compiled by Bloomberg. While that’s below a 19-month high of 93 percent reached in May, it’s up from its 2013 bottom of 27.8 percent in June. There were 56 stocks in the index that closed at a 52-week high yesterday and none at a 52-week low.
The S&P 500 rose yesterday as Bernanke said the pace of economic recovery will determine when the Fed reduces its asset purchases. In a prepared report, he said the central bank’s asset purchases are not on a preset course. Bernanke continues his semi-annual testimony on monetary policy to the Senate Banking Committee today.
Fed policy makers have been debating the timing and pace of any cuts in the central bank’s $85 billion in monthly bond purchases. Bernanke has said any reduction will be tied to sustained improvement in the labor market or an increase in inflation.
‘No Shocks’
“Bernanke is really guiding the market so that there are no real shocks when Fed actions do take place,” Jonathan Aldrich-Blake, who helps oversee about $10 billion at Ashburton Ltd., said by phone from Jersey, Channel Islands. “The ‘bad news is good news’ we saw in the market earlier this year is starting to die down as people have more belief in this recovery.”
Equity futures rose today after a report showed fewer Americans than forecast filed applications for unemployment benefits as the effects of auto-plant shutdowns began to ebb. Separate data from the Conference Board indicated an index of leading indicators in the U.S. economy was unchanged in June.
Stocks extended gains after a report showed the Philadelphia Fed’s general economic index increased to 19.8 in July from 12.5 the prior month. Readings greater than zero signal expansion in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware.
Earnings Scorecard
Some 32 companies, including Google Inc. and Microsoft Corp., are scheduled to post quarterly results today. Per-share earnings topped estimates at about 75 percent of S&P 500 members that have reported for the quarter so far, data compiled by Bloomberg show.
“We’re not expecting any blowout for U.S. earnings this quarter,” Aldrich-Blake said. “They will probably come in more in line with expectations than in previous periods and there hasn’t really been anything stellar so far. We’re looking at growth in the U.S. more toward the tail end of this year.”
Nine of 10 groups in the S&P 500 advanced today, led by a 1.2 percent surge among financial companies. The KBW Bank Index added 1.5 percent to its highest level since October 2008.
Lender Results
Morgan Stanley jumped 5.1 percent to $27.90 after posting a 66 percent earnings increase that beat analysts’ predictions as trading revenue rose and the profit margin at its wealth-management unit climbed.
Bank of America Corp., which yesterday reported earnings ahead of estimates, gained 2.7 percent to 14.70. SLM Corp. (SLM), the student lender known as Sallie Mae, advanced 6.1 percent to $24.84 after reporting second-quarter core earnings that beat analysts’ estimates as private education delinquencies fell.
IBM gained 2.4 percent to $199.24 after predicting earnings will be at least $16.90 a share in 2013, up from its earlier prediction for $16.70. The company is betting that faster-growing market such as cloud computing and data analysis can offset a slowdown in information-technology spending.
UnitedHealth jumped 5.2 percent to $69.70, the most in the Dow. The biggest U.S. health insurer reported second-quarter profit that beat analyst estimates as a Brazilian acquisition and gains in U.S. plans swelled enrollment by 25 percent.
Car Rally
Automakers rose 1.9 percent as a group, the biggest gain among 24 industries in the S&P 500. Johnson Controls Inc. led the advance, as shares climbed 7.2 percent to $40.04, the most in the benchmark gauge. The largest U.S. auto-parts maker will sell its HomeLink line of installed garage-door openers to Gentex Corp. for $700 million as it seeks a buyer for the rest of its automotive electronics unit.
Intel slid 3.5 percent to $23.31. The world’s largest semiconductor maker said late yesterday sales in the current period may miss estimates as a slump in the personal-computer market erodes its largest business.
EBay tumbled 6.5 percent to $53.65. Third-quarter sales will be $3.85 billion to $3.95 billion as e-commerce growth rates in Europe and Korea slow and currencies weaken against the U.S. dollar, the online marketplace provider said. That’s less than the average analyst projection of $3.97 billion.
Celgene Corp. declined 2.5 percent to $133.23 after saying it will stop a late-stage trial of its Revlimid drug for treatment of leukemia in elderly patients because of the number of deaths in the study.
Reviews:
Post a Comment