U.S. stocks advanced, as the Standard & Poor’s 500 Index rallied for a third straight week, amid optimism that the U.S. economy is improving amid central-bank monetary stimulus.
Gap Inc. added 5.6%, pacing gains with discretionary stocks after forecasting profit that topped estimates. Nvidia Corp. rose 4.5% as fiscal first-quarter sales and earnings exceeded projections. Priceline.com Inc. increased 3.8% to its highest in 14 years after reporting better-than- forecast results. Apple Inc., the world’s most valuable company, lost 0.8%.
The S&P 500 increased 0.4% to a record 1,633.70 at 4 p.m. in New York. The index rallied 1.2% this week. The Dow Jones Industrial Average added 35.87 points, or 0.2%, to 15,118.49, an all-time high. Almost 5.7 billion shares traded hands on U.S. exchanges today, or 9% below the three- month average.
“The party continues,” Rex Macey, who oversees $20 billion as chief investment officer at Wilmington Trust Investment Advisors in Atlanta, said by telephone. “Bad news is out there, which continues to be what’s going on in Europe. Japan is better. The U.S. seems to be doing fine. Earnings are supportive of the equity market. We’ve got the Fed and central banks that are supportive. We’re in this low interest rate, low inflation environment, and that’s pretty good for equities.”
The U.S. bull market has entered its fifth year. The S&P 500 has surged 141% from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Fed.
The central bank said May 1 it will maintain its bond buying at a pace of $85 billion a month and is prepared to raise or lower the level of purchases as economic conditions evolve. It also plans to hold its target interest rate near zero as long as unemployment remains above 6.5% and the outlook for inflation doesn’t exceed 2.5%.
Group of Seven finance ministers started a two-day meeting in Aylesbury, north of London, today. Central banks worldwide have announced 511 interest-rate cuts since June 2007, according to a Bank of America Corp. tally done before Vietnam and Sri Lanka lowered their policy rates today.
U.S. stocks retreated yesterday, snapping a streak of five straight records for the S&P 500, after Federal Reserve Bank of Philadelphia President Charles Plosser said he favors scaling back the central bank’s stimulus as early as the next Federal Open Market Committee meeting, which is scheduled for June 18-19.