The S&P 500 climbed to a record yesterday as the European Central Bank cut its key interest rate and U.S. jobless-benefit claims unexpectedly fell. The Federal Reserve said May 1 it will keep buying bonds at a monthly pace of $85 billion while standing ready to raise or lower purchases as the economy changes.
The benchmark U.S. equities gauge has advanced 1% this week. The U.S. bull market has entered its fifth year as the S&P 500 surged 139% from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases by the Fed.
Berkshire Hathaway Inc. is among 12 S&P 500 companies posting results today. Of the 404 that have reported profit so far, 73% exceeded analysts’ earnings predictions while 53% missed on sales, data compiled by Bloomberg show. Profit at S&P 500 companies rose 1.1% in the first three months of the year, according to estimates compiled by Bloomberg.
“Nobody has been happy with top line growth for a while,” James Kee, president at South Texas Money Management in San Antonio, Texas, said in a phone interview. His firm oversees about $1.9 billion. “What we’ve seen on the top line is pretty consistent with what we’ve seen in the underlying economy, that is low, but positive private sector growth.”
The Chicago Board Options Exchange Volatility Index, or VIX, slid 4.9% to 12.93 as investors cut demand for protection against losses in the S&P 500. The benchmark gauge for options has fallen 28% this year.
All 10 industry groups in the S&P 500 advanced as companies whose earnings are most tied to economic swings led the gains. Industrial and commodity shares climbed more than 1.8%.
The Morgan Stanley Cyclical Index surged 2.7% and the Dow Jones Transportation Average increased 2.7%. The Russell 2000 Index of small companies jumped 2.1% to a record.
Caterpillar, the biggest maker of mining machinery, advanced 2.8% to $86.59. GE, the supplier of wind turbines, added 2.3% to $22.83.
Kraft Foods Group, the grocery business spun off from Kraft Foods Inc. in 2012, rose 4.9% to $53 after reporting first-quarter earnings of 76 cents a share, including a restructuring charge of 12 cents a share. That exceeded the average analyst projection of 64 cents. It also reiterated a full-year earnings forecast of about $2.75 a share.
AIG, the insurer that repaid a bailout last year, climbed 5.8% to $44.59, the highest in more than two years, as results improved at the property-casualty operation. First-quarter operating profit, which excludes some investment results, was $1.34 a share, topping the 88-cent average forecast of 19 analysts surveyed by Bloomberg.
LinkedIn fell 9.1% to $183.40 as the world’s biggest online professional-networking service said late yesterday it sees second-quarter revenue in the range of $342 million to $347 million. That missed the $359.7 million projected by analysts in a Bloomberg survey.