S&P 500 rises to record on jobs data, earnings as Bernanke talks

U.S. stocks rose, sending benchmark indexes to records, as earnings from Morgan Stanley and UnitedHealth Group Inc. beat estimates and jobless claims fell amid testimony from Federal Reserve Chairman Ben S. Bernanke.

Morgan Stanley rallied 4.8% as stock-trading revenue bolstered profit. International Business Machines Corp. added 2% after raising its full-year earnings target. UnitedHealth jumped 6.7% after profit beat estimates as membership surged. Intel Corp. lost 3.7% after forecasting third-quarter sales that may fall short of some analysts’ predictions. EBay Inc. tumbled 6.7% after its forecast for third-quarter sales missed estimates.

The Standard & Poor’s 500 Index (CME:SPU13) gained 0.6% to 1,690.49 at 3:01 p.m. in New York, surpassing the previous intraday high of 1,687.18 set on May 22. The Dow Jones Industrial Average added 83.40 points, or 0.5%, to 15,553.92, also a record. Trading in S&P 500 stocks was 11% above the 30-day average at this time of day.

“The underlying concept of what Bernanke is trying to accomplish is taking hold in the marketplace, and that’s a good thing,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in an interview. His firm oversees about $8 billion. “The market gets the idea the a tapering is coming, the economy is improving and rates are still going to be low for a time. The initial jobless claims were better than expected. Earnings are coming in OK. All in all its hard not to be bullish on the market here.”

Broad Rally

Fed stimulus and better-than-forecast corporate earnings have fueled a surge in stocks worldwide, with the benchmark U.S. index jumping as much as 150% from its March 2009 low. Today’s S&P 500 rally pushed the estimated 2013 price-to- earnings ratio to 15.3, the highest since April 2010.

About 81% of stocks in the index traded above their average prices from the past 50 days as of yesterday, according to data compiled by Bloomberg. While that’s below a 19-month high of 93% reached in May, it’s up from its 2013 bottom of 27.8% in June. There were 56 stocks in the index that closed at a 52-week high yesterday and none at a 52-week low.

The S&P 500 rose yesterday as Bernanke said the pace of economic recovery will determine when the Fed reduces its asset purchases. In a prepared report, he said the central bank’s asset purchases are not on a preset course. In testimony to the Senate Banking Committee today, Bernanke said data since the Fed’s June meeting is mixed and it is “way too early to make any judgment” as to whether policy makers will start tapering purchases in September.

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