U.S. stocks advance as investors analyze Bernanke testimony

Housing Starts

Data today showed U.S. housing starts unexpectedly fell in June to the lowest level in almost a year. Work began on 836,000 houses at an annualized rate last month, the least since August 2012 and down 9.9% from a revised 928,000 pace in May, figures from the Commerce Department showed today in Washington. The reading was weaker than projected by any economist in a Bloomberg survey.

The Chicago Board Options Exchange Volatility Index, which measures the cost of protecting against swings on the S&P 500, dropped 4% to 13.84. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80% of the time, reached a six-month high on June 20 and has fallen 32% since.

Some 21 companies, including EBay Inc. and International Business Machines Corp., are due to release results today. Per- share earnings topped estimates at about 71% of S&P 500 members that have reported for the quarter so far, data compiled by Bloomberg show.

Bank of America added 3.2% to $14.36. The second- biggest U.S. lender beat analysts’ estimates by posting a 63% gain in profit that was driven by lower provisions for bad credit and a drop in expenses.

New Regulations

Chief Executive Officer Brian T. Moynihan has said he’ll eliminate $8 billion in annual costs by the end of 2014 and $10 billion tied to troubled mortgages a year later. The biggest banks are focused on curbing expenses amid new regulations, higher capital requirements and sluggish lending.

Bank of New York Mellon climbed 2% to $30.97. The world’s largest custody bank said profit rose 79% as the stock-market rally boosted assets and fees for overseeing them.

Yahoo rose 9% to $29.30, the highest level since May 2008. The company reported second-quarter earnings of 35 cents a share, beating analysts’ estimates. The company made $225 million in earnings in the quarter from its equity interest in both Alibaba Group Holding Ltd. and Yahoo Japan Corp., up from $180 million in the same period last year.

St. Jude Medical Inc. advanced 6.8% to $51.76. The Minnesota-based maker of heart-rhythm devices surged after second-quarter revenue fell less than analysts had estimated.

U.S. Bancorp

U.S. Bancorp, the nation’s largest regional lender, fell 1.5% to $36.70 after the firm said it expects mortgage revenue to continue to decline this year. Second-quarter net income climbed 4.9% to $1.48 billion, or 76 cents per share, matching the average estimate of 34 analysts.

American Express slipped 2.5% to $76.33. The European Commission will propose that interchange fees paid by retailers on card transactions should be capped at 0.2% for debit card payments and 0.3% for credit cards, according to draft plans obtained by Bloomberg.

The proposal would reduce New York-based American Express’s earnings-per-share by about 3.7% because the company gets 11% of its business from Europe, Morgan Stanley analysts said in a research note. Credit Suisse analysts said the plan would hurt American Express more than MasterCard Inc. or Visa Inc., which have already agreed to provisionally cap some fees.

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

comments powered by Disqus