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

Stimulus Debate

The central bankers have been debating the timing and pace of any cuts in the central bank’s $85 billion in monthly bond purchases. Bernanke has said any reduction will be tied to sustained improvement in the labor market or an increase in inflation.

“Bernanke is really guiding the market so that there are no real shocks when Fed actions do take place,” Jonathan Aldrich-Blake, who helps oversee about $10 billion at Ashburton Ltd., said by phone from Jersey, Channel Islands. “The ‘bad news is good news’ we saw in the market earlier this year is starting to die down as people have more belief in this recovery.”

Equity futures rose today after a report showed fewer Americans than forecast filed applications for unemployment benefits as the effects of auto-plant shutdowns began to ebb. Separate data from the Conference Board indicated an index of leading indicators in the U.S. economy was unchanged in June.

Economic Expansion

Stocks extended gains after a report showed the Philadelphia Fed’s general economic index increased to 19.8 in July from 12.5 the prior month. Readings greater than zero signal expansion in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware.

“Jobless claims were a little bit better than expected which gives some comfort,” Richard Sichel, who oversees about $1.9 billion as chief investment officer at Philadelphia Trust Co., said by phone. “And then you have earnings rolling full steam now so it becomes a stock-by-stock market.”

Some 32 companies, including Google Inc. and Microsoft Corp., are scheduled to post quarterly results today. Per-share earnings topped estimates at about 75% of S&P 500 members that have reported for the quarter so far, data compiled by Bloomberg show.

The Chicago Board Options Exchange Volatility Index, which measures the cost of protecting against swings on the S&P 500, dropped 0.8% to 13.67 for the 10th decline in 11 sessions. 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 33% since.

Broad Rally

Eight of 10 groups in the S&P 500 advanced today, led by a 1.3% surge among financial companies. The KBW Bank Index added 1.7% to its highest level since October 2008.

Morgan Stanley jumped 4.8% to $27.81 after posting a 66% earnings increase that beat analysts’ predictions as trading revenue rose and the profit margin at its wealth- management unit climbed.

Bank of America Corp., which yesterday reported earnings that beat estimates, gained 3.6% to 14.82. SLM Corp., the student lender known as Sallie Mae, advanced 5.1% to $24.60 after reporting second-quarter core earnings that beat analysts’ estimates as private education delinquencies fell.

Shares in companies whose earnings are most closely tied to economic growth rose to a record. The Morgan Stanley Cyclical Index added 1.3% to the highest level since the gauge started in 1978.

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