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.

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