S&P closes at record

U.S. stocks fluctuated after the Standard & Poor’s 500 (CME:SPM14) closed at a record yesterday as the Federal Reserve promised to keep interest rates low amid signs of an economic recovery.

BlackBerry Ltd. jumped 12% after reporting a narrower loss than analysts had projected. Red Hat Inc. advanced 4.5% after increasing its annual revenue forecast. Starbucks Corp. climbed 2.3% after UBS AG boosted its rating on the world’s largest coffee-shop chain.

The S&P 500 lost less than 0.1% to 1,956.75 at 10:05 a.m. in New York. The benchmark equity index advanced for four straight days through yesterday. The Dow Jones Industrial Average fell 7.38 points, or less than 0.1%, to 16,899.24. Trading in S&P 500 companies was in line with the 30-day average for this time of day.

“We think this is a seriously dovish statement from the Federal Reserve and that the Fed is willing to accept inflation well above 2% before any action will be taken,” Chad Morganlander, a money manager at St. Louis-based Stifel, Nicolaus & Co., which oversees about $160 billion in assets, said by phone. “The overall broader markets are sniffing that out.”

Global equities rallied yesterday after Fed Chair Janet Yellen said accommodative monetary policy, rising property and equity prices and the improving global economy should lead to above-trend growth. Yellen emphasized the need to put more Americans back to work and downplayed concerns about asset-price bubbles and incipient inflation.

The central bank reduced its bond purchases by $10 billion for a fifth consecutive meeting, to $35 billion, leaving it on schedule to end the program this year. The stimulus has helped the S&P 500 rally 189% from its bear-market low in March 2009.
 

‘Super Dove’
 

“Yellen is a super dove,” Lex Van Dam, a fund manager at Hampstead Capital LLP in London, said in an interview. “There remain very few alternatives for your cash other than putting it in stocks. The trend remains up in markets. I believe in the Fed. The economy has recovered on financial engineering.”

The benchmark index has climbed 7.9% since a low on April 11 as data showed the economy is recovering from the impact of extreme weather earlier this year. The gauge is trading at 16.6 times the projected earnings of its members, up from 15.5 times at the beginning of the year.

Fewer Americans filed applications for unemployment benefits last week, a sign of steady progress in the labor market. Jobless claims fell 6,000 to 312,000 in the week ended June 14, the Labor Department reported today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for 313,000.

The Conference Board’s U.S. leading economic indicators gauge, a measure of the outlook for the next three to six months, increased 0.5% in May after a 0.3% gain in April, the New York-based group said today. The Federal Reserve Bank of Philadelphia’s factory index increased to 17.8 in June, topping economists’ forecasts. Readings greater than zero signal growth in the area covering eastern Pennsylvania, southern New Jersey and Delaware.


BlackBerry Rallies
 

BlackBerry jumped 12% to $9.28. The smartphone maker posted a first-quarter loss of 11 cents a share excluding one- time items, better than the 25-cent average loss that analysts had estimated in a Bloomberg survey. Cost cuts helped offset a decline in sales.

Red Hat gained 4.5% to $55.50. The largest seller of Linux operating-system software said annual earnings will be as much as $1.79 billion in fiscal 2015, higher than the $1.73 billion to $1.76 billion it had forecast in March. The company’s first-quarter adjusted profit of 34 cents a share and sales of $424 million, beat analyst estimates.

Starbucks rose 2.3% to $77.32. UBS boosted its rating on the Seattle-based company to buy from neutral and its stock-price estimate to $87 from $80. The brokerage said Starbucks is one of the companies with the best long-term growth opportunities among consumer multinationals.
 

Monster Beverage
 

Monster Beverage Corp. advanced 2.3% to $73.02. Wells Fargo & Co. started covering the stock, giving it an outperform rating, the equivalent of a buy. BTIG also initiated coverage of the shares with a buy.

American Apparel Inc. jumped 11% to 71 cents. The casual clothing maker replaced its chief executive officer, Dov Charney, who has faced accusations of sexual harassment, after an investigation into misconduct at the company he created.

KBR Inc., a construction contractor for the energy industry, dropped 9.8% to $23.73. The company said it will undergo a “strategic review” of its business after reporting losses in a Canadian assembly plant and on two U.S. construction projects.

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