Stocks gain with commodities as dollar trims advance on Bernanke

July 17 (Bloomberg) -- U.S. stocks rose, erasing earlier losses, and commodities climbed as Federal Reserve Chairman Ben S. Bernanke said the central bank is prepared to act to boost growth if labor markets don’t improve. The Dollar Index erased gains while Treasuries retreated.

The Standard & Poor’s 500 Index added 0.7 percent to 1,363.15 at 2:27 p.m. in New York after retreating as much as 0.6 percent. The Dollar Index, a gauge of the currency against six major peers, was little changed after rallying as much as 0.6 percent. Ten-year Treasury yields added three basis points to 1.50 percent, while a rally in oil helped lead the S&P GSCI Index to a fifth straight gain, its longest rally in 11 weeks, even as 19 of its 24 commodities decreased.

Stocks retreated in the first hour of trading as Bernanke’s prepared testimony to Congress provided no specific plans for boosting growth. Equities recovered as the Fed chairman’s answers to senators’ questions signaled he’s concerned about the economic recovery and doesn’t view inflation as a hindrance to providing more stimulus.

“His downbeat assessment of the economy left the impression that QE3 may be coming soon,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which oversees $350 billion, said in an e-mail. “QE3” refers to a third round of stimulus measures known as quantitative easing.

Bernanke’s testimony followed data yesterday showing a contraction in June retail sales and a report today that the cost of living in the U.S. was little changed in June, a sign inflation may stay subdued.

Market Leaders

Indexes of health-care, commodity, telephone and consumer- discretionary stocks rose at least 1 percent to lead gains in all 10 of the main industries in the S&P 500.

Walt Disney Co. rallied 3.5 percent to a record after Bank of America Corp. raised the world’s largest entertainment company to a buy. Coca-Cola Co. advanced 1.9 percent after posting earnings that topped projections. Mattel Inc. jumped 11 percent after reporting second-quarter profit that exceeded the average analyst estimate.

Goldman Sachs Group Inc. increased 0.3 percent, trimming a rally of as much as 2.9 percent. The bank reported second- quarter profit that exceeded analysts’ estimates and selling its hedge-fund administration unit to State Street Corp.

Earnings beat estimates at 32 of the 45 companies in the S&P 500 that have reported quarterly results so far, data compiled by Bloomberg showed. Profits are down 3 percent for the group and earnings are projected to decrease 2.1 percent for the entire S&P 500.

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