U.S. stocks rose a seventh day, sending the Standard & Poor’s 500 Index to a record close, as better-than-estimated bank earnings overshadowed a reduced profit forecast from United Parcel Service Inc.
Financial stocks added the most out of 10 S&P 500 groups after JPMorgan Chase & Co. and Wells Fargo & Co. reported earnings that topped analysts’ estimates. UPS fell 5.8 percent as it lowered its forecast for earnings in 2013, citing a slowing economy in the second quarter.
The S&P 500 added 0.3 percent to 1,680.06 at 4 p.m. in New York, extending its winning streak to seven days, the longest since Jan. 4. The gauge jumped 3 percent in the past five days, its third straight weekly advance.
The benchmark index rallied 1.4 percent to a record 1,675.02 yesterday after Federal Reserve Chairman Ben S. Bernanke backed sustained monetary stimulus. The surge has helped to erase losses since Bernanke first signaled the Fed may trim its $85 billion in monthly bond purchases later this year.
Equities retreated earlier today after Fed Bank of Philadelphia President Charles Plosser, who has opposed the central bank’s current round of asset purchases, said the Fed should begin tapering in September. The benchmark gauge halted the decline after Fed Bank of St. Louis President James Bullard said the central bank shouldn’t cut back until inflation accelerates toward the Fed’s 2 percent goal.
The debate among policymakers in the past six weeks has sent markets lurching as investors speculate on the timing and rate of any cuts in bond buying. Central bank stimulus has helped fuel a rally in stocks worldwide, with the benchmark U.S. index surging as much as 148 percent from its March 2009 low.
The S&P 500 sank as much as 5.8 percent after reaching a record May 21, the day before Bernanke said the central bank may start paring stimulus efforts as soon as September if the economy improves in line with its forecasts. The index has rebounded 6.7 percent from a June 24 bottom as economic data from hiring to housing tempered concern over possible tapering.
“The Fed’s hope is that investors shift over time from liquidity-driven strength to economy-driven strength,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.6 billion in assets, said by phone. “I don’t know if we’ve seen true economic strength here yet, but we’re a lot closer than we were a couple of years ago.”
A report today showed consumer confidence unexpectedly cooled in July as Americans became less optimistic about the outlook for the economy. Separate data indicated wholesale prices in the U.S. rose more than projected in June, reflecting higher costs for energy and automobiles.
Investors have begun to turn their attention toward earnings results this week. Profit at companies listed on the S&P 500 rose 2 percent last quarter, down from a projection of 8.7 percent six months ago, according to analyst estimates compiled by Bloomberg. Lower expectations helped about 73 percent of the companies in the benchmark measure exceed forecasts by an average of 5.1 percent for the first three months of the year, Bloomberg data show.
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