)
US stocks jumped, sending the Standard & Poor's 500 Index above its record closing level, as Federal Reserve Chairman Ben S Bernanke backed sustained monetary stimulus.
All 10 groups in the S&P 500 rallied, with consumer-staples and technology shares posting the biggest gains. Freeport-McMoRan Copper & Gold Inc and Newmont Mining Corp led gold producers higher as the precious metal's price soared. Advanced Micro Devices Inc (AMD) rose 12 per cent as analysts recommended that investors buy the shares. An S&P gauge of homebuilders added 5.8 per cent as all 11 members advanced.
The S&P 500 gained one per cent to 1,669.19 at 12:44 pm in New York. The benchmark gauge climbed above the all-time closing record of 1,669.16 reached May 21, erasing losses since Bernanke first suggested the Fed might curb stimulus this year. The Dow Jones Industrial Average jumped 133.14 points, or 0.9 per cent, to 15,424.80 on Thursday. Trading in S&P 500 stocks was four per cent above the 30-day average at this time of day.
"The story in stocks for this year is about confidence replacing uncertainty and anxiety," Hank Smith, who oversees $7 billion as chief investment officer at Radnor, Pennsylvania-based Haverford Trust Co, said by telephone. "It's really more about an improvement in sentiment. That's being a big driver for equity returns and we are still a long ways away from worrying about there being too much optimism or exuberance."
Central bank stimulus has helped fuel a rally in stocks worldwide, with the benchmark US index surging 147 per cent from its March 2009 low. The S&P 500 has advanced for six straight days, the longest winning streak since March 11.
Bernanke comments
Bernanke said on Wednesday that "highly accommodative monetary policy for the foreseeable future" was needed in the world's largest economy. The Fed chairman spoke just three hours after the central bank released minutes of the June 18-19 gathering showing that about half of the 19 participants in the Federal Open Market Committee (FOMC) wanted to halt $85 billion in monthly bond purchases by year end. At the same time, the minutes showed many Fed officials wanted to see more signs employment is improving before backing a trim to bond purchases known as quantitative easing.
"Everybody's hanging on the Fed's every word," Malcolm Polley, who manages $1.1 billion as chief investment officer at Stewart Capital Advisors LLC in Indiana, Pennsylvania, said. "Even though Bernanke's comments after the last FOMC meeting really weren't hawkish, the market has wanted more clarity in terms of what he meant. Bernanke was as clear as one can be, saying 'We're not going to step on the brakes. We're just going to let up on the accelerator.' The more dovish comments he made on Wednesday clarifies that position."
'Primary driver'
"Fed policy has been helpful no question, but the driver of equity returns off of the March 2009 bottom has been fundamentals, not Fed policy," Haverford's Smith said. "You've had over the past four years tremendous earnings growth confirmed by dividend growth. That has been the primary driver of the market but yet Fed policy has been helpful."
Investors are watched earnings results this week. Profit at companies listed on the S&P 500 rose 1.8 per cent 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 per cent of the companies in the benchmark measure exceed forecasts by an average of 5.1 per cent for the first three months of the year, Bloomberg data show.
The Chicago Board Options Exchange Volatility Index, or VIX, slid 1.9 per cent to 13.94. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 per cent of the time, has declined six straight days, the longest streak of losses since January.
