U.S. stocks rose, rebounding from yesterday’s drop, amid bets Federal Reserve Chairman Ben S. Bernanke will hint at more stimulus during testimony to Congress.
The Standard & Poor’s 500 Index (SPX) gained 0.4 percent to 1,358.84 as of 9:30 a.m. in New York. The U.S. equity benchmark lost 0.2 percent yesterday. The Dow Jones Industrial Average added 30.35 points, or 0.2 percent, to 12,757.56 today.
“The market is looking for the Fed chairman to be fairly definitive,” Jim Russell, the Cincinnati-based chief equity strategist at U.S. Bank Wealth Management, which oversees about $103 billion, said in a phone interview. “Certainly the CPI numbers give the Fed ample room to be even more accommodative than what they’ve done before. They have room to be aggressive.”
Bernanke will deliver his semi-annual report on the economy and monetary policy before Congress today and tomorrow. Data yesterday showing a contraction in June retail sales kindled speculation the Fed will introduce more measures to support the world’s largest economy. The cost of living in the U.S. was little changed in June, a sign inflation may stay subdued.
No change in the consumer-price index followed a 0.3 percent drop in May, a Labor Department report showed today in Washington. The measure matched the median forecast of economists in a Bloomberg News survey. The so-called core measure that excludes volatile food and fuel costs rose 0.2 percent for a fourth month.
“Stocks are being helped by expectations about Bernanke’s testimony to Congress later today,” said Jakup Petur Baerentsen, a chief equity adviser at Nordea Private Bank in Copenhagen. “Investors are speculating if he’ll hint a third round of quantitative easing”
Minutes from the Fed’s June meeting, released on July 11, showed that two participants supported additional bond purchases, while two others said only a further deterioration in the economy would warrant them.
The Citigroup Economic Surprise Index for the U.S., which measures how much data from the past three months is beating or missing the median estimates in Bloomberg surveys, is at minus 64, near the almost 11-month low of minus 64.9 reached last week. The gauge peaked at 91.9 in January.
Earnings beat estimates at 31 of the 44 companies in the S&P 500 that have reported quarterly results so far, data compiled by Bloomberg showed.
“The earnings progression in the second quarter looks pretty good,” Russell said. “We heard from the financial companies and Goldman Sachs was notable.”
Goldman Sachs climbed 1.7 percent to $99.36. The fifth- biggest U.S. bank by assets reported an 11 percent drop in earnings that beat analysts’ estimates on trading even as first- half revenue fell to the lowest since 2005. State Street Corp., the third-largest custody bank, bought Goldman’s hedge-fund administration unit for $550 million.
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