U.S. stocks rise on Fed bets amid industrial output reports

U.S. stocks rose, with benchmark gauges poised for a sixth weekly gain, as investors assessed data on factory production amid growing speculation the Federal Reserve will maintain the pace of its monthly bond buying.

Exxon Mobil Corp. gained 1.8% after Warren Buffett’s Berkshire Hathaway Inc. disclosed a stake. FedEx Corp. climbed 1.3% after billionaire investors George Soros and John Paulson took positions. Fannie Mae and Freddie Mac increased at least 9.7% as Bill Ackman’s hedge fund disclosed stakes in the government-backed mortgage insurers. Western Union Co. dropped 5.3% after the company said its chief financial officer is leaving.

The Standard & Poor’s 500 Index rose 0.2% to 1,794.81 at 2:28 p.m. in New York. The gauge has gained 1.3% this week, poised for its sixth straight advance, the longest rally since February. The Dow added 61.84 points, or 0.4%, to 15,938.06. Trading in S&P 500 shares was 5.4% higher than the 30-day average for this time of day.

Janet Yellen’s remarks yesterday told investors that “interest rates are going to remain low for a while, which is a positive environment for equities,” John Fox, director of research at Fenimore Asset Management in Cobleskill, New York, said by phone. Fenimore oversees about $1.8 billion. “The combination of earnings growth and expanded PE due to investors feeling better about things just continues to move the market higher.”

The S&P 500 and the Dow extended records yesterday as Janet Yellen, nominated to succeed Ben S. Bernanke as chairman of the Federal Reserve, said the central bank should take care not to withdraw stimulus too early from an economy that is operating well below potential.

Data Watch

Data today showed manufacturing in the New York region unexpectedly contracted in November. A separate report showed total industrial production in the U.S. fell 0.1% in October as output at mines and utilities declined. Factory output rose more than forecast. Wholesale inventories widened by 0.4% in September, the Census Bureau said.

Central bank policy makers will probably pare the $85 billion monthly pace of bond buying to $70 billion at their March 18-19 meeting, according to the median of 32 estimates in a Bloomberg survey of economists on Nov. 8. The group next meets Dec. 17-18. The Fed support has helped propel the S&P 500 higher by 165% from its March 2009 low.

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