U.S. stocks rose, erasing earlier losses, after Federal Reserve Bank of St. Louis President James Bullard said the central bank should continue its bond buying to boost growth that is slower than expected.
Home Depot Inc. jumped 2.5% after raising its earnings forecast. JPMorgan Chase & Co. rose 2.5% as Jamie Dimon survived a campaign to split his chairman and chief executive officer titles. Apple Inc. lost 0.6% as the company faced a Senate panel that yesterday released a report saying the iPhone maker used loopholes to avoid paying taxes. Carnival Corp. dropped 5.3% after the cruise operator lowered its profit projection for the second half of 2013.
The Standard & Poor’s 500 Index gained 0.2% to 1,670.18 at 12:21 p.m. in New York, after falling as much as 0.2% earlier. The Dow Jones Industrial Average added 51.53 points, or 0.3%, to 15,386.81. Trading in S&P 500 stocks was 3.2% below the 30-day average during this time of day.
“We have a long stretch now with no significant decline and I think that’s going to continue until there is some significant concern about the Fed stopping,” Jason Thomas, chief investment officer of Los Angeles-based Aspiriant, said in a phone interview. Aspiriant is an independent wealth management firm with over $7 billion in asset under management.
The purchases known as quantitative easing should be maintained because financial markets indicate that they are improving financial conditions and can be adjusted based on how the economy changes, Bullard, who votes on the policy-setting Federal Open Market Committee this year, said today according to the text of remarks prepared for delivery in Frankfurt.
Fed Chairman Ben S. Bernanke testifies on the outlook for the U.S. economy before the Joint Economic Committee of Congress tomorrow. The Federal Open Market Committee also releases the minutes of its April 30-May 1 meeting tomorrow. Policy makers said after their last meeting that they will keep buying $85 billion of bonds every month, while standing ready to raise or lower purchases as conditions evolve.
Some Fed officials in recent months have signaled they favor scaling back the quantitative-easing program in the next few months. Stocks erased gains yesterday after Fed Bank of Chicago President Charles Evans said the U.S. economy has improved “quite a lot” as the central bank maintains record stimulus. The question now is “how much confidence we have that the improvements that have been made will continue and be sustained,” said Evans, who holds a vote on the FOMC this year.