U.S. stocks rose on better-than- forecast earnings from companies including Pfizer Inc. and Valero Energy Corp., returning benchmark indexes to five-year highs. Oil helped lead a rally in commodities as global reports boosted economic confidence, while the dollar fell.
The Standard & Poor’s 500 Index increased 0.5 percent to 1,507.6 at 3:10 p.m. in New York. Oil climbed 1.2 percent to a four-month high of $97.57 a barrel and silver jumped 2 percent to send the S&P GSCI Index of commodities to the highest level since October. The euro strengthened 0.3 percent to $1.3489, its strongest since 2011. Ten-year Treasury yields were at 1.99 percent a day after rising above 2 percent for the first time since April.
The S&P 500 extended its best start to a year since 1989 as profit beat the average analyst estimate at 75 percent of the 175 companies in the index that posted results so far this reporting season. U.S. home prices rose by the most in six years, the 20-city S&P/Case-Shiller index showed, while reports from Germany to Australia signaled improved global sentiment. Equities remained higher even as U.S. consumer confidence fell more than forecast in January, reaching the lowest level in more than a year.
“The market’s responding favorably to, and will continue to respond favorably to, the earnings reporting season because the majority of companies will beat expectations,” Hank Smith, who helps oversee $6.5 billion as chief investment officer of Haverford Trust Co. in Radnor, Pennsylvania, said in a phone interview. “The market is all about expectations.”
The S&P 500 has more than doubled from a 12-year low in 2009 as corporate earnings have climbed for three years and the Federal Reserve has increased its bond purchases to keep interest rates low to spur growth. The S&P 500 is less than 4 percent below its record of 1,565.15 set in October 2007 while the Dow Jones Industrial Average is less than 2 percent from its all-time high.
U.S. companies from Pfizer to 3M Co. are beating analysts’ quarterly sales estimates at the highest rate in 1 1/2 years, undeterred by political gridlock in Washington and slowing demand in China. The 67 percent beat rate is the highest percentage since the second quarter of 2011, according to data compiled by Bloomberg. Fewer than half the companies had surprise sales gains in the second and third quarters.
Pfizer rallied 3.3 percent after adjusted earnings beat projections and the drugmaker forecast higher-than-expected full-year profit after introducing two products with the potential to each generate more than $1 billion a year.
Energy shares climbed as Valero jumped 12 percent after posting a 20-fold gain in earnings. Ford Motor Co. slid 4.8 percent after saying it expects to lose about $2 billion in Europe this year as a likely recession in the region continues to sap demand for cars.