U.S. stocks rallied, sending the Standard & Poor’s 500 Index above 1,700 for the first time, after central banks vowed to maintain stimulus and data on global manufacturing beat forecasts.
All 10 S&P 500 main industries advanced. MetLife Inc. rose 6.5 % on better-than-estimated operating earnings. Procter & Gamble Co. gained 1.5 % after posting profit that topped analysts’ estimates. DreamWorks Animation SKG Inc. jumped 8.6 % as earnings surged. Exxon Mobil Corp. slid 1.3 % as profit trailed estimates by the most in more than a decade.
The S&P 500 rose 1.2 % to 1,706.06 at 2:54 p.m. in New York. The Dow Jones Industrial Average advanced 133 points, or 0.9 %, to a record 15,632.54. Trading in S&P 500 stocks was in line with the 30-day average during this time of day.
“Central banks throughout the world remain accommodative and you do not want to fight the central banks,” Phil Orlando, New York-based chief equity strategist at Federated Investors, which manages about $380 billion in assets, said by phone. “All of the data from an economic standpoint is telling that the economy is continuing to get better, the labor market is improving, and corporate earnings are coming in better than expected. So this market should continue to work higher.”
The Fed said yesterday that persistently low inflation could hamper the economy and pledged to keep buying $85 billion in bonds every month. The statement came as data showed the U.S. economy grew more than projected in the second quarter. European Central Bank President Mario Draghi said today that recent economic indicators signal that the euro region is through the worst and reiterated that officials plan to keep interest rates low for the foreseeable future.
Three rounds of bond purchases by the Fed, coupled with improving earnings and economic growth, has helped propel the S&P 500 up more than 150 % from its bear-market low in 2009. Speculation about the Fed’s monthly bond purchases has whipsawed stocks since May, when Chairman Ben S. Bernanke first indicated policy makers could begin reducing the stimulus this year if the job market continues to improve.
Investors poured $38.1 billion into exchange-traded funds listed in the U.S. last month, the most since December 2008 and the fourth-highest inflow ever, according to data compiled by Bloomberg since 2000. Almost $30 billion of the deposits went to funds that buy and sell American equities.
“When you see milestones, that gets people interested,” Randy Bateman, who oversees $15 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, said by phone. “Maybe there’s still a lot of money sitting on the sidelines that might be tempted to come into the market. I think it’s a bullish thing.”