Stocks rose, sending the Dow Jones Industrial Average to a record, and Treasuries gained as Federal Reserve officials said weakness in the U.S. economy warrants continued stimulus. Oil led commodities up from a four-month low while the yen and dollar weakened.
The Dow advanced 121.62 points, or 0.8%, to 15,739.84 at 3:20 p.m. in New York. The Standard & Poor’s 500 Index added 0.4% to 1,769.55 after paring a gain that sent it as high as 1,773.74, a record on a closing basis. Ten- year Treasury yields fell three basis points to 2.64%. The dollar declined (NYBOT:DXZ13) against 12 of 16 major peers while the yen weakened against all 16. The S&P GSCI gauge of 24 commodities rallied 0.4% as New York-traded oil rose the most in five weeks following a government report showing an increase in U.S. gasoline demand.
U.S. growth and payrolls figures this week may give clues on the outlook for Fed policy as two papers from central bank officials said the level of slack in America’s economy justifies an accommodative monetary-policy stance. U.S. stocks extended a global advance after ING Groep NV, the biggest Dutch financial- services company, reported net income that beat analysts’ estimates and Toyota Motor Corp., the world’s largest automaker, raised its full-year profit forecast by 13%.
“The central bank has decided they will reward risk behavior and that’s what we’re going to get,” Bill Mann, chief investment officer at Motley Fool Asset Management in Alexandria, Virginia, said in a phone interview. His firm manages $560 million. “The market will keep hitting their highs until the stimulus reverses itself.”
The S&P 500 (CME:SPZ13) has rallied about 24% in 2013, its best yearly gain in a decade. The benchmark index for U.S. stocks traded at about 16.8 times member company reported earnings at its last record reached Oct. 29, the highest valuation in more than three years. The Stoxx 600 is up 16% this year and the MSCI All-Country World Index has gained 17%.
The S&P 500 rebounded from yesterday’s 0.3% drop as eight of its 10 main industry groups advanced, led by utility, telephone, consumer-staples and technology companies.
Microsoft Corp. climbed 4% as Nomura Holdings Inc. said the software company may exit its money-losing consumer business under a new chief executive officer. Ralph Lauren Corp. climbed 4.7% after the apparel maker boosted the lower end of its sales forecast and increased its dividends. Tesla Motors Inc. tumbled 13%, leading the Nasdaq-100 Index lower, as vehicle sales missed some analysts’ estimates. Abercrombie & Fitch Co. slumped 12% after posting sales that trailed expectations.