U.S. stocks rose, as monthly flows into equity exchange-traded funds reached a five-year high, after housing data and earnings from companies including McDonald’s Corp. fueled speculation stimulus would continue.
Newmont Mining Corp. climbed 5.9%, leading gains among gold producers, as the metal’s price rose to a one-month high. McDonald’s slipped 2.5% after revenue missed forecasts. Yahoo Inc. dropped 3.9% after saying activist investor Daniel Loeb is leaving the board. Homebuilders fell, with D.R. Horton Inc. losing 2.1%, as sales of previously owned houses unexpectedly dropped in June, hurt by a lack of supply and rising mortgage rates.
The Standard & Poor’s 500 Index rose 0.2% to 1,695.60 at 3:08 p.m. in New York, extending a record. The Dow Jones Industrial Average slipped 2.4 points, or less than 0.1%, to 15,546.14. Trading in S&P 500 stocks was 15% below the 30-day average during this time of day.
“The earnings reflect a growing economy, but not a robust economy, not a runaway economy,” John Carey, a fund manager at Boston-based Pioneer Investment Management Inc., said by telephone. His firm oversees $211.5 billion. “There was concern that the economy may be doing a little better than the Fed was estimating and that might lead to an earlier tapering. Now with fairly modest economic growth and slow earnings growth, I don’t think people are going to be as worried about the tapering.”
The S&P 500 rallied 0.7% last week to a record, after better-than-forecast earnings and Federal Reserve Chairman Ben S. Bernanke said the central bank remains flexible about the duration of its asset-purchase program. Fed stimulus has helped fuel a surge in stocks worldwide, with the S&P 500 jumping as much as 151% from its March 2009 low.
Investors have increasingly turned to stocks this month, as U.S. equity exchange-traded funds are getting money at the fastest rate since September 2008. After adding $10.2 billion to ETFs last week, the July total stands at $29.7 billion, according to data compiled by Bloomberg. Mutual funds that invest in U.S. equities had $4.55 billion of inflows during the week through July 10, ending seven consecutive weeks of withdrawals.
Individuals have 69% of their assets in mutual funds, almost a percentage point more than the average since 1992 and four points more than in 2012, Goldman Sachs Group Inc. said in a note to clients. Investors are demonstrating the “strongest risk appetite in five years,” according to the note dated July 19.