U.S. stocks rise as Fed’s Bullard says stimulus should continue

‘Fairly Benign’

“I view a move by the Fed toward normalizing monetary policy as ultimately a good thing,” Liz Ann Sonders, chief investment strategist at Charles Schwab Corp., said on Bloomberg Television. Her firm has $2 trillion in client assets. “It will be a taper; they’re not going to grind this to a halt all of a sudden. If the reason is that economic growth has picked up with inflation expectations still fairly benign, then that’s the best reason for the Fed to do it.”

The S&P 500 has surged 146% from its 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Fed.

Goldman Sachs Group Inc. said the U.S. stock-market rally may last at least another 2 1/2 years and send the S&P 500 up 26% to 2,100.

David Kostin, the bank’s New York-based chief U.S. equity strategist, raised forecasts for the U.S. equity benchmark, predicting it will finish 2013 at 1,750 and 2014 at 1,900 as stock valuations increase, according to a research report dated yesterday. The S&P 500 trades at 16.3 times reported operating profit, 16% below the average since 1998, data compiled by Bloomberg show.

Earnings Scorecard

Eight companies on the S&P 500 post their financial results today. Of the stocks that have released earnings this season, 71% have beaten analysts’ estimates, while 52% have missed analysts’ sales predictions.

Home Depot increased 2.5% to $78.67. America’s largest home-improvement retailer beat analyst estimates for first-quarter profit. Home Depot is benefiting from rising U.S. home prices that are giving homeowners the confidence to start projects and spend more. Profit this year will be $3.52 a share, up from a previous estimate of $3.37, the company said.

Lowe’s Cos. added 0.3% to $42.49. The second-largest home-improvement retailer is scheduled to report quarterly results tomorrow.

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