US stocks rose, with the Standard & Poor's 500 Index extending a record, as data showing lower retail sales and consumer confidence fuelled bets the Federal Reserve will maintain stimulus as it starts a policy meeting.
Fed policy makers on Tuesday began a two-day meeting to discuss efforts to fuel economic growth and combat 7.2 per cent unemployment by holding the main interest rate at a record low and buying $85 billion in bonds each month. The purchases have expanded the Fed balance sheet to $3.84 trillion
Pfizer Inc, the world's biggest drugmaker, jumped 1.5 per cent after reporting third-quarter profit that beat analysts' estimates. Masco Corp, which makes faucets and kitchen and bath cabinets, rose 4 per cent as its sales topped forecasts. Xylem Inc surged 12 per cent after the water company whose pumps helped clean tunnels in New York flooded by Hurricane Sandy raised its annual earnings forecast.
"It still seems that the Fed has created this good news is bad news, bad news is good news scenario," Randy Bateman, who oversees $15 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, said by telephone. "The anticipation is that the Fed will retain its purchasing of $85 billion in monthly Treasury and mortgage securities, which is going to continue to help the housing market. That will be taken fairly well by the market."
The S&P 500 climbed in 12 of the past 14 sessions through yesterday, as companies beat estimates in the current earnings reporting season and signs of slower economic growth fuelled bets the Fed will maintain stimulus measures. The rally has pushed the index up 24 per cent this year, leaving it poised for the best annual gain in a decade.
Taper bets
The 16-day government shutdown earlier this month took at least $24 billion out of the economy and will spur the Fed to wait until March to taper, a Bloomberg survey showed this month. The central bank's policy makers convene on Tuesday and Wednesday. Data today showed retail sales dropped 0.1 per cent last month, restrained by the biggest decrease at auto dealers since October 2012. Wholesale prices unexpectedly fell in September as food costs retreated. Inflation has been running below the Fed's 2 per cent objective in the near-term, giving policy makers room to maintain monetary stimulus.
A separate report showed confidence among US consumers declined in October by the most since August 2011 as the budget impasse and debt-ceiling negotiations in Washington took a toll on outlooks.
Weak data
Weaker-than-forecast data yesterday on factory output and sales of previously owned homes added to concern that growth slowed in the weeks before the shutdown. Home prices in 20 US cities rose in August from a year ago by the most since February 2006, the S&P/Case-Shiller index indicated on Tuesday.
The Fed's stimulus has helped propel the S&P 500 up more than 160 per cent from a 12-year low in 2009. While the rally lifted equity valuations to a four-year high, with the index trading at 15.9 times estimated operating earnings, that's still below the multiples at the market's two previous peaks, when the ratio reached 16.5 in October 2007 and 25.7 in March 2000, data compiled by Bloomberg show.
Some 39 members of the S&P 500 release results on Tuesday, including Pfizer Inc. and Goodyear Tire & Rubber Co Earnings for the broad equity gauge probably increased 3.7 per cent in the third quarter as sales climbed 2.4 per cent, according to analysts' estimates compiled by Bloomberg. Profits have grown by an average of 5.7 per cent among the 282 companies that have reported so far, while sales have gained 3.5 per cent.
'More stability'
"We're seeing some more stability in some of the international markets for exporters and continued modest improvement here in the United states," Paul Mangus, head of equity strategy and research for Wells Fargo Private Bank in Charlotte, North Carolina, said in a phone interview. His firm manages $170 billion. "You have revenue coming in sluggish, but that was pretty much as expected. Margins have come in a little higher than expectations, so there's a reason for an improvement in investor confidence."
The Chicago Board Options Exchange Volatility Index, the gauge known as VIX (VIX) that measures options traders' estimate of future price swings in S&P 500, fell 0.1 percent to 13.30 today. The gauge has lost 20 percent so far this month.
Eight of 10 main S&P 500 groups advanced today, with phone and consumer-staples companies rising at least 0.8 percent to pace gains. AT&T Inc. jumped 1.9 percent to $36.26 for the biggest advance in the Dow.
Pfizer Profit
Masco climbed 4 percent to $21.67. The company said it had sales of $2.2 billion last quarter, beating the average estimate in a Bloomberg poll of analysts for revenue of $2.1 billion. Adjusted earnings of 27 cents a share also beat projections.
Pfizer rose 1.5 percent to $31.21. Higher sales of its top vaccine and pain drugs also boosted profit. Pfizer is pushing to expand sales of Prevnar, a pneumococcal vaccine and its second-biggest product, since losing marketing exclusivity for Lipitor, once the world's top-selling drug.
Xylem Inc. surged 12 percent to $32.50 for the biggest gain in the S&P 500. A 6 percent rise in orders in the third quarter, an ozone project in China and a pumping and control system for the Singapore Transport Authority helped Xylem post earnings and sales that beat analysts' estimates
Michael Kors
Michael Kors Holdings Ltd. climbed 1.4 percent to $77.44. The luxury-goods company founded by the designer of the same name will replace NYSE Euronext in the S&P 500 after the close of trading on Nov. 1, S&P said. NYSE Euronext, the biggest U.S. stock exchange owner, is being acquired by Atlanta-based IntercontinentalExchange Inc.
Apple Inc. (AAPL) lost 1.4 percent to $522.30. The maker of the iPhone said revenue in the current quarter will be $55 billion to $58 billion, compared with the $55.5 billion average of analysts' estimates. Gross margins will be 36.5 percent to 37.5 percent, versus the 38 percent projection.
Aetna Inc. (AET) slipped 1.7 percent to $60.76. The third-biggest U.S. health insurer said quarterly profit rose 3.9 percent, boosted by the acquisition of rival Coventry Health Care Inc. Insurer shares have slid this month after the top two carriers, UnitedHealth Group Inc. and WellPoint Inc., gave outlooks for next year that disappointed investors.
The industry faces falling payments from the U.S. Medicare program. Technical issues with the Obamacare rollout also have clouded prospects for new business from the federal health-care law.
Industrial Stocks
Goodyear Tire & Rubber Co. plunged 8.4 percent to $20.21. The company reported third-quarter sales that missed analyst estimates and said consumer demand for original equipment in Europe, the Middle East and Asia may fall 5 percent in the rest of 2013.
Cummins Inc. fell 8.8 percent to $122.98. The engine maker experienced "weak demand for capital goods in most of our major markets," Chief Executive Officer Tom Linebarger said in a statement. Third-quarter profit of $1.90 a share missed analysts' average estimate of $2.11, as growth in China and Brazil was offset by weak demand in India, Australia and Europe, according to the statement.
Caterpillar Inc., the maker of construction and mining equipment, slid 1.1 percent to $83.34 for the steepest drop in the Dow. Joy Global Inc., which manufactures machines for extracting ores and minerals, lost 2.9 percent to $57.02, halting a five-day rally.
Materials producers fell 0.3 percent for the biggest drop among 10 S&P 500 groups. MeadWestvaco Corp., a packaging company, plunged 7 percent to $36.05 after adjusted earnings fell short of estimates.
Seagate Technology Plc lost 3.7 percent to $48.02. The disk drive maker forecast fiscal second-quarter sales below analyst estimates and said it expects demand for its products to remain similar to prior quarters.
American Capital Agency Corp. (AGNC) fell 8.1 percent to $21.93. The real-estate investment trust that buys mortgage debt reported third-quarter spread earnings per share of 58 cents, compared with analysts' forecast of 81 cents.
Fed policy makers on Tuesday began a two-day meeting to discuss efforts to fuel economic growth and combat 7.2 per cent unemployment by holding the main interest rate at a record low and buying $85 billion in bonds each month. The purchases have expanded the Fed balance sheet to $3.84 trillion
Pfizer Inc, the world's biggest drugmaker, jumped 1.5 per cent after reporting third-quarter profit that beat analysts' estimates. Masco Corp, which makes faucets and kitchen and bath cabinets, rose 4 per cent as its sales topped forecasts. Xylem Inc surged 12 per cent after the water company whose pumps helped clean tunnels in New York flooded by Hurricane Sandy raised its annual earnings forecast.
More From This Section
The S&P 500 rose 0.3 per cent to 1,767.20 at 12 pm in New York. The Dow Jones Industrial Average gained 53.14 points, or 0.3 per cent, to 15,622.07. Trading in S&P 500 stocks was in line with the 30-day average at this time of day.
"It still seems that the Fed has created this good news is bad news, bad news is good news scenario," Randy Bateman, who oversees $15 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, said by telephone. "The anticipation is that the Fed will retain its purchasing of $85 billion in monthly Treasury and mortgage securities, which is going to continue to help the housing market. That will be taken fairly well by the market."
The S&P 500 climbed in 12 of the past 14 sessions through yesterday, as companies beat estimates in the current earnings reporting season and signs of slower economic growth fuelled bets the Fed will maintain stimulus measures. The rally has pushed the index up 24 per cent this year, leaving it poised for the best annual gain in a decade.
Taper bets
The 16-day government shutdown earlier this month took at least $24 billion out of the economy and will spur the Fed to wait until March to taper, a Bloomberg survey showed this month. The central bank's policy makers convene on Tuesday and Wednesday. Data today showed retail sales dropped 0.1 per cent last month, restrained by the biggest decrease at auto dealers since October 2012. Wholesale prices unexpectedly fell in September as food costs retreated. Inflation has been running below the Fed's 2 per cent objective in the near-term, giving policy makers room to maintain monetary stimulus.
A separate report showed confidence among US consumers declined in October by the most since August 2011 as the budget impasse and debt-ceiling negotiations in Washington took a toll on outlooks.
Weak data
Weaker-than-forecast data yesterday on factory output and sales of previously owned homes added to concern that growth slowed in the weeks before the shutdown. Home prices in 20 US cities rose in August from a year ago by the most since February 2006, the S&P/Case-Shiller index indicated on Tuesday.
The Fed's stimulus has helped propel the S&P 500 up more than 160 per cent from a 12-year low in 2009. While the rally lifted equity valuations to a four-year high, with the index trading at 15.9 times estimated operating earnings, that's still below the multiples at the market's two previous peaks, when the ratio reached 16.5 in October 2007 and 25.7 in March 2000, data compiled by Bloomberg show.
Some 39 members of the S&P 500 release results on Tuesday, including Pfizer Inc. and Goodyear Tire & Rubber Co Earnings for the broad equity gauge probably increased 3.7 per cent in the third quarter as sales climbed 2.4 per cent, according to analysts' estimates compiled by Bloomberg. Profits have grown by an average of 5.7 per cent among the 282 companies that have reported so far, while sales have gained 3.5 per cent.
'More stability'
"We're seeing some more stability in some of the international markets for exporters and continued modest improvement here in the United states," Paul Mangus, head of equity strategy and research for Wells Fargo Private Bank in Charlotte, North Carolina, said in a phone interview. His firm manages $170 billion. "You have revenue coming in sluggish, but that was pretty much as expected. Margins have come in a little higher than expectations, so there's a reason for an improvement in investor confidence."
The Chicago Board Options Exchange Volatility Index, the gauge known as VIX (VIX) that measures options traders' estimate of future price swings in S&P 500, fell 0.1 percent to 13.30 today. The gauge has lost 20 percent so far this month.
Eight of 10 main S&P 500 groups advanced today, with phone and consumer-staples companies rising at least 0.8 percent to pace gains. AT&T Inc. jumped 1.9 percent to $36.26 for the biggest advance in the Dow.
Pfizer Profit
Masco climbed 4 percent to $21.67. The company said it had sales of $2.2 billion last quarter, beating the average estimate in a Bloomberg poll of analysts for revenue of $2.1 billion. Adjusted earnings of 27 cents a share also beat projections.
Pfizer rose 1.5 percent to $31.21. Higher sales of its top vaccine and pain drugs also boosted profit. Pfizer is pushing to expand sales of Prevnar, a pneumococcal vaccine and its second-biggest product, since losing marketing exclusivity for Lipitor, once the world's top-selling drug.
Xylem Inc. surged 12 percent to $32.50 for the biggest gain in the S&P 500. A 6 percent rise in orders in the third quarter, an ozone project in China and a pumping and control system for the Singapore Transport Authority helped Xylem post earnings and sales that beat analysts' estimates
Michael Kors
Michael Kors Holdings Ltd. climbed 1.4 percent to $77.44. The luxury-goods company founded by the designer of the same name will replace NYSE Euronext in the S&P 500 after the close of trading on Nov. 1, S&P said. NYSE Euronext, the biggest U.S. stock exchange owner, is being acquired by Atlanta-based IntercontinentalExchange Inc.
Apple Inc. (AAPL) lost 1.4 percent to $522.30. The maker of the iPhone said revenue in the current quarter will be $55 billion to $58 billion, compared with the $55.5 billion average of analysts' estimates. Gross margins will be 36.5 percent to 37.5 percent, versus the 38 percent projection.
Aetna Inc. (AET) slipped 1.7 percent to $60.76. The third-biggest U.S. health insurer said quarterly profit rose 3.9 percent, boosted by the acquisition of rival Coventry Health Care Inc. Insurer shares have slid this month after the top two carriers, UnitedHealth Group Inc. and WellPoint Inc., gave outlooks for next year that disappointed investors.
The industry faces falling payments from the U.S. Medicare program. Technical issues with the Obamacare rollout also have clouded prospects for new business from the federal health-care law.
Industrial Stocks
Goodyear Tire & Rubber Co. plunged 8.4 percent to $20.21. The company reported third-quarter sales that missed analyst estimates and said consumer demand for original equipment in Europe, the Middle East and Asia may fall 5 percent in the rest of 2013.
Cummins Inc. fell 8.8 percent to $122.98. The engine maker experienced "weak demand for capital goods in most of our major markets," Chief Executive Officer Tom Linebarger said in a statement. Third-quarter profit of $1.90 a share missed analysts' average estimate of $2.11, as growth in China and Brazil was offset by weak demand in India, Australia and Europe, according to the statement.
Caterpillar Inc., the maker of construction and mining equipment, slid 1.1 percent to $83.34 for the steepest drop in the Dow. Joy Global Inc., which manufactures machines for extracting ores and minerals, lost 2.9 percent to $57.02, halting a five-day rally.
Materials producers fell 0.3 percent for the biggest drop among 10 S&P 500 groups. MeadWestvaco Corp., a packaging company, plunged 7 percent to $36.05 after adjusted earnings fell short of estimates.
Seagate Technology Plc lost 3.7 percent to $48.02. The disk drive maker forecast fiscal second-quarter sales below analyst estimates and said it expects demand for its products to remain similar to prior quarters.
American Capital Agency Corp. (AGNC) fell 8.1 percent to $21.93. The real-estate investment trust that buys mortgage debt reported third-quarter spread earnings per share of 58 cents, compared with analysts' forecast of 81 cents.