“The global risk has been abating significantly, especially in Europe,” Douglas Cote, Hartford, Connecticut- based chief market strategist at ING U.S. Investment Management, said in a phone interview. His firm oversees more than $160 billion. “The bigger concern about market participants is missing a fourth-quarter rally. Hedge funds, the shorts, they will have to cover. They will have to capitulate and I think that’s going to provide the next up-leg.”
Andrew Garthwaite, a strategist at Credit Suisse Group AG, raised his forecast for the S&P 500 this year to 1,500 from 1,425, saying ECB President Mario Draghi’s announcement of an unlimited bond-purchase program is a “game-changer” in a note today. He also cited improving economic data, the likelihood of a third round of Fed stimulus, or quantitative easing, and supportive valuations. He boosted his earnings estimate for companies in the S&P 500 to $100.10 a share from $99.60.
Commodity, financial and industrial shares in the S&P 500 climbed at least 0.7 percent for the biggest advances among 10 groups today. The Morgan Stanley Cyclical Index rose 1.5 percent while the KBW Bank Index added 1.6 percent to the highest level since April. Bank of America jumped 4.7 percent to $8.74.
China approved plans to build 2,018 kilometers (1,254 miles) of roads while backing nine sewage-treatment plants, five port and warehouse projects, and two waterway upgrades, according to statements on the website of the National Development and Reform Commission yesterday. The announcements are a sign the government is stepping up stimulus efforts to revive economic growth.
Cliffs Natural, the largest U.S. iron-ore producer, rallied 14 percent to $39.57. Caterpillar, the world’s largest maker of construction and mining machines, rose 3.7 percent to $87.92. Alpha Natural, the second-largest U.S. coal producer, surged 15 percent to $6.78.
SunTrust Banks Inc., the lender that invested in Coca-Cola Co. in 1919, rose 3.1 percent to $27.50 after announcing plans to liquidate its stake to help cover costs of restructuring bad loans. The transaction will boost third-quarter net income by about $750 million, or $1.40 a share, the bank said.