The Fed has said it plans to keep benchmark interest rates near zero at least as long as the unemployment rate is above 6.5% and inflation is no more than 2.5%.
Speculation about the stimulus has whipsawed stocks since May, when the Fed first indicated cuts could start this year. The S&P 500 tumbled 5.8% from a record high on May 21 through June 24. It then rebounded as much as 8.7% to close at its latest record of 1,709.67 on Aug. 2. The index finished yesterday 3.9% below the all-time high.
The Chicago Board Options Exchange Volatility Index, or VIX, dropped 7.3% to 14.77 today, after jumping yesterday to the highest since July 3. The equity volatility gauge has retreated 18% this year as the S&P 500 has rallied 16% on growing signs economic growth is improving.
Data today showed the Conference Board’s index of leading economic indicators increased 0.6% in July. The median forecast in a Bloomberg survey of economists called for a 0.5% advance.
Overseas reports showed Germany led growth in manufacturing and services in the euro area, while a gauge for China’s factory output unexpectedly showed expansion.
Energy stocks rallied 1.4% and materials producers jumped 1% as all 10 main industries in the S&P 500 advanced today.
Cliffs Natural Resources Inc. surged 6.3% to $22.55 and Freeport-McMoRan Copper & Gold Inc. added 4% to $31.57 to pace gains among miners. Industrial metals rallied on the data from China, the world’s biggest consumer of commodities.
A factory index released by HSBC Holdings Plc and Markit Economics showed a preliminary reading of 50.1, exceeding the 48.2 median estimate of economists in a Bloomberg survey. Readings above 50 signal growth.