U.S. stocks rose as the Standard & Poor’s 500 Index rebounded from the biggest plunge since November 2011.
Consumer, health-care and utility companies led gains among 10 S&P 500 groups, rising at least 1.1%. CarMax Inc. jumped 3.5 after quarterly earnings that topped analysts’ estimates. Facebook Inc. increased 2.9% after adding video to its Instagram photo-sharing service for smartphones. Oracle Corp. tumbled 8.9% after reporting a second straight quarter of sales that missed estimates.
The S&P 500 climbed 0.5% to 1,596.26 at 9:54 a.m. in New York. The Dow Jones Industrial Average added 60.89 points, or 0.4%, to 14,819.21. U.S. stock trading may be more volatile than usual as futures and options contracts expire in a process known as quadruple witching.
“There was an element of the market that was surprised by the aggressive timetable outlined by the Fed, but I don’t think it should be seen as too negative,” said Henk Potts, who helps oversee $282 billion as an equity strategist at Barclays Plc’s Wealth unit in London. “The U.S. economy is now going to be doing the heavy lifting rather than artificial stimulus. In the short term it has hit sentiment, but in the longer term we are advising clients to buy on weakness.”
The S&P 500 sank 2.5% yesterday as global equities tumbled after the Federal Reserve indicated it may start paring stimulus measures as soon as September. The benchmark index declined 4.9% since its May 21 high through yesterday amid speculation the Fed will scale back quantitative easing that helped fuel a rally in stocks worldwide and lifted the S&P 500 as much as 147% from its bear-market low in 2009.
Billionaire investor Ken Fisher said the U.S. stock rally is only in its “middle” stages because most investors still underestimate the strength of the economy.
“We’re right in that transition between skepticism and optimism,” the founder of Fisher Investments, which manages $48 billion, said in an interview at Bloomberg News’s office in Seattle on June 19. “The notion that it’s actually the middle of a bull market and there’s a lot ahead. That’s a really impossible concept for most people to get.”
Economists have increased forecasts that the Fed will trim its monthly bond purchases to $65 billion in September and end buying in June 2014. In a Bloomberg survey of 54 economists conducted June 19-20, 44% saw a tapering in September, up from 27% in a June 4-5 survey.