U.S. stocks rose, sending the Standard & Poor’s 500 Index to a record, as Amazon.com Inc. (AMZN:US) and Microsoft (MSFT:US) Corp. sales beat estimates while a drop in consumer confidence added to speculation the Federal Reserve will delay scaling back monetary stimulus.
Amazon.com surged 9.4 percent as consumers flocked to the largest online retailer ahead of the holiday shopping season, helping to curtail losses. Microsoft jumped 6 percent as the company relied on corporate software demand to make up for weak consumer personal-computer purchases. Eastman Chemical Co. slumped 5.2 percent after cutting its full-year forecast.
The S&P 500 rose 0.4 percent to 1,759.77 at 4 p.m. in New York. The Nasdaq 100 Index climbed 0.6 percent to 3,383.83. The Dow Jones Industrial Average added 61.07 points, or 0.4 percent, to 15,570.28. About 6 billion shares changed hands on U.S. exchanges, in line with the three-month average.
“Earnings have been good enough and the liquidity spigot is open so that people see very little risk in the system,” Charlie Smith, chief investment officer of Pittsburgh-based Fort Pitt Capital Group Inc., said in a phone interview. His firm oversees $1.5 billion. “It’s like a giant game of musical chairs. The attitude on the part of most investors is that they have to play while the Fed got the music going.”
The S&P 500 has jumped 4.7 percent this month as lawmakers agreed to raise the government’s borrowing limit, avoiding a sovereign default. Equities rallied for a third week, with the benchmark index up 0.9 percent, as signs of slower economic recovery fueled bets the Fed will wait until March before scaling back bond purchases.
Exchange-traded funds that invest in U.S. equities took in more than $2.3 billion the last four days, bringing this month’s flows to about $15.8 billion, data compiled by Bloomberg show. October is on track for the biggest intake since July.
Stocks briefly pared gains today as a person in Kentucky Republican Rand Paul’s office said the Senator is considering placing a hold on the nomination of Janet Yellen to lead the Fed. Equities rallied earlier this month when President Barack Obama chose Yellen to succeed Ben S. Bernanke as Fed chairman. As a top deputy to Bernanke, Yellen supported the central bank’s bond-buying programs that have helped propel the S&P 500 up 160 percent from a 12-year low in 2009.
Better-than-expected earnings and continued monetary stimulus have driven the S&P 500 up 23 percent this year. 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.
“Valuation is still reasonable and the economy appears to getting better,” Alan Gayle, senior investment strategist and director of asset allocation at RidgeWorth Capital Management, said by phone from Atlanta. His firm oversees about $48 billion. “The market does look a bit extended so it wouldn’t surprise me if we saw some near-term pullback.”
Data today showed consumer confidence in the U.S. dropped in October to a 10-month low, showing the reopening of the federal government failed to reassure households. The Thomson Reuters/University of Michigan final consumer sentiment index for October decreased to 73.2 from 77.5 the prior month. The median estimate in a Bloomberg survey called for a decline to 75 compared with a preliminary reading of 75.2.
Orders for U.S. durable goods rose in September by the most in three months as stronger demand for commercial and military aircraft outweighed a drop in business equipment.
Sixteen S&P 500 (SPX) reported earnings today. Of the 244 members of the gauge that have released results so far, 76 percent exceeded analysts’ predictions for profit, while 54 percent beat sales estimates, data compiled by Bloomberg showed.
Earnings for the broad equity gauge probably increased 3.7 percent in the third quarter as sales climbed 2.4 percent, according to analysts’ estimates compiled by Bloomberg.
The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, slipped 0.8 percent to 13.09, trimming its gain for the week to 0.4 percent.
All 10 S&P 500 groups gained today as phone and utility shares climbed more than 1 percent to lead the advance. Technology shares increased 0.4 percent.
Amazon jumped 9.4 percent to an all-time high of $363.39. Chief Executive Officer Jeff Bezos has poured money into the company’s delivery network, cloud-computing services and line of Kindle e-readers and tablets, sacrificing near-term profits to fuel growth. That could put Amazon on track to outpace the e-commerce market, where sales are seen climbing 15.5 percent to $83.2 billion, according to EMarketer Inc.
Microsoft rallied 6 percent to $35.73. The world’s largest software maker is undergoing unprecedented changes, conducting its first-ever CEO search to replace Steve Ballmer and starting an organizational overhaul aimed at bolstering sales by focusing on devices and services.
United Parcel Service Inc. (UPS:US) added 1.2 percent to a record $95.61. The world’s largest-package delivery company beat analysts’ estimates for third-quarter earnings. The company said revenue (UPS:US) from each domestic parcel rose 1 percent and daily package volume was up 2.3 percent.
Alexion Pharmaceuticals Inc. (ALXN:US) climbed 7.3 percent to a record $125.17. The maker of a drug for rare blood diseases boosted its full-year earnings forecast (ALXN:US) to as much as $3.04 a share. That compared with the average analyst estimate of $3.03.
National Oilwell Varco Inc. rose 4.5 percent to $82.72. The biggest U.S. maker of oil-field equipment reported third-quarter earnings that topped analysts’ estimates and said it expects orders for the current quarter to be good, “maybe great.”
Zynga (ZNGA:US) Inc. advanced 5.5 percent to $3.73. The maker of social-networking games reported its first quarter under Chief Executive Officer Don Mattrick, recording a smaller-than-forecast loss as purchases of items used in games exceeded the company’s forecast.
Eastman Chemical slumped 5.2 percent to $77.94. The producer of chemicals said it expects full-year earnings to be as low as $6.30 a share, trailing the average analyst estimate of $6.47 in a Bloomberg survey.
Express Scripts Holding Co. (ESRX:US) declined 4.5 percent to $60.88, the lowest since May. The largest U.S. processor of prescription drug claims reduced its 2013 cash flow (ESRX:US) forecast, citing delays in some non-client integration activities.
Yahoo! Inc. lost 2.5 percent to $32.25 after Yahoo Japan Corp. (4689) forecast full-year sales and profits that missed analysts’ estimates.
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