Speculation slower growth in hiring will extend Federal Reserve stimulus lifted U.S. stocks and pushed the annual advance in the Standard & Poor’s 500 Index within a percentage point of the best yearly gain in a decade.
The S&P 500 rose 0.7% to 1,757.34 at 3:29 p.m. in New York after closing at a record yesterday, bringing its increase since December to 23.2%. The gauge would have to reach 1,761 to surpass the 23.5% surge in 2009 and be poised for the largest annual rise since 2003, when it climbed 26.4%. American stocks have rallied amid $85 billion in monthly bond purchases by the Fed aimed at jumpstarting the economy and record earnings.
Unlike in 2003, when gains in the S&P 500 followed a 49% plunge after the bursting of the technology bubble, this year’s advance is building on strength. The benchmark gauge for American equities had already doubled from its 12-year low in March 2009 through the end of 2012. Almost $13 trillion has been restored to U.S. equity values during the 4 1/2-year bull market, data compiled by Bloomberg show.
The Dow Jones Industrial Average advanced 101.79 points, or 0.7%, to 15,493.99 today, the highest in a month. Trading in S&P 500 stocks was 26% above the 30-day average during this time of day.
Whirlpool Corp. climbed 11% after the world’s largest appliance maker lifted its forecast. Freeport-McMoRan Copper & Gold Inc. jumped 4% amid better-than-expected earnings. Apple Inc. lost less than 0.1%, reversing an earlier gain of 1.4% and halting a nine-day rally. Netflix Inc. slipped 8.5% after Chief Executive Officer Reed Hastings attributed the stock’s rally to investor “euphoria.”
The S&P 500 rallied as much as 0.8% today, boosted by speculation the Fed will delay curtailing its monetary stimulus after payrolls in the U.S. climbed by less than forecast in September, indicating the economy had little momentum leading up to the 16-day shutdown of the federal government. The jobless rate fell to an almost five-year low.
“This report indicates the Fed is joining us for the holiday season at the current level of quantitative easing,” Darrell Cronk, the New York-based regional chief investment officer at Wells Fargo Private Bank, which oversees $170 billion, said by phone. “And it will probably be ringing in the New Year with us as well as it continues QE through the end of 2013. Right now the data is not suggesting any kind of tapering.”
Progress in the labor market depends on how quickly the world’s largest economy can bounce back from the loss of business caused by the government closure. The budget dispute weighed on fourth-quarter growth and will prompt Fed policy makers to wait until March before starting to scale back the $85 billion of monthly bond purchases, a Bloomberg survey showed last week.
A separate report showed construction spending in the U.S. rose in August for a fifth consecutive month, propelled by the strongest outlays on homebuilding in five years. Federal spending dropped to the lowest level in five years, showing government budget cuts will hold the industry back.
Investors are also watching corporate earnings to gauge the health of the economy. Analysts have raised their forecasts for profits in the third quarter, predicting an average increase of 2.5% for all companies in the gauge, according to estimates compiled by Bloomberg. That compares with a 1.7% projection at the beginning of the month.
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