U.S. stocks gain, Treasuries fall on retail sales as yen weakens

Fed Stimulus

The S&P 500 fell 0.1 yesterday, its fifth drop in the past six days after closing at a record on Aug. 2, amid growing speculation the Federal Reserve will pare bond purchases this year as the economy strengthens. Fed officials have been scrutinizing data to determine whether growth is strong enough to curtail stimulus.

Charles Evans, Sandra Pianalto and Richard Fisher, regional Fed presidents in Chicago, Cleveland and Dallas, said last week that policy makers may be closer to tapering debt buying.

Fed Bank of Atlanta President Dennis Lockhart, who has backed the Fed’s $85 billion in monthly bond purchases, said today that policy makers may start to slow buying at any of their next few meetings amid “uneven performance” by the economy.

Retail Sales

The 0.2% increase in U.S. retail sales last month followed a 0.6% gain in June that was larger than previously reported, according to Commerce Department figures issued today in Washington. The median forecast of 81 economists surveyed by Bloomberg called for a 0.3% advance.

Treasuries dropped the most in more than a week as the retail sales report added to speculation the economy is strengthening enough for the Fed to reduce its bond-buying program.

The S&P 500 will climb 8% to 1,825 in the next 12 months as economic growth gains momentum, according to Goldman Sachs Group Inc. David Kostin, the bank’s chief U.S. equity strategist, recommends buying shares of companies that generate most of their revenue domestically.

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