NEW YORK: Stocks rose Wednesday, sending benchmark indexes to records, as Macy’s Inc. led a rally among retailers and investors awaited testimony from Federal Bank Vice Chairman Janet Yellen for clues to the central bank’s stimulus policy.
Macy’s jumped 9.4 percent as better-than-estimated earnings fueled optimism about the holiday shopping season.
The S&P 500 gained 0.8 percent to 1,781.87 at the close, reversing an earlier decline of as much as 0.4 percent.
The Dow Jones Industrial Average rose 69.68 points, or 0.4 percent, to 15,820.35.
“Macy’s and retail in general has pulled up the overall market,” Tim Ghriskey, who helps manage more than $1.5 billion as chief investment officer of Solaris Asset Management LLC, said by phone. “Expectations were very low for the holiday season, and perhaps now they’ve been raised a bit. The backdrop around stocks remains favorable, and the market is anticipating economic improvement, which will drive revenue and earnings.”
Investors have been weighing better-than-projected earnings and data to gauge whether the economy may be strong enough to withstand less stimulus from the central bank. This week will bring reports on U.S. jobless-benefit claims and manufacturing in the New York area. Investors may get some insight into Fed policy thinking when Yellen testifies before the Senate Banking Committee for her confirmation hearing to succeed Ben S. Bernanke as chairman.
“We could see some reaction to whatever Janet Yellen says,” Kate Warne, a St. Louis-based investment strategist at Edward Jones & Co., said by phone. Her firm oversees $746 billion. “Everyone would like to have some indication of when the Fed will begin to taper its purchases, but she’ll probably be quite constrained in how she discusses her views on the economy and Federal Reserve policy.”
Reducing bond purchases “ought to be on the table at upcoming meetings” by the Federal Open Market Committee, including Dec. 17-18, Fed Bank of Atlanta President Dennis Lockhart said on Tuesday. Central bank policymakers will probably scale back the monthly pace of bond buying at their March 18-19 meeting, according to the median of 32 estimates in a Bloomberg survey of economists on Nov. 8.
In the U.K., Bank of England Governor Mark Carney signaled that officials may consider raising interest rates sooner than they previously forecast as the U.K. economy recovers “robustly” and inflation slows. The jobless rate as measured by International Labour Organisation standards declined to 7.6 percent in the third quarter, the lowest since 2009, the Office for National Statistics said today.
The S&P 500 has climbed to record levels this year as the Fed maintained its $85 billion in monthly asset purchases. Central bank support has helped propel the index higher by more than 160 percent from its March 2009 low. The gauge has rallied 25 percent so far in 2013, poised for its best year in a decade, and is trading at 16 times projected earnings, more than the five-year average of 14 times profit, according to data compiled by Bloomberg.
Pessimism about U.S. stocks among newsletter writers is at the lowest level in at least 24 years. The percentage of newsletter writers classified as bears by Investors Intelligence dropped to 15.5 percent from 15.6 percent last week, the least since Bloomberg began tracking the data in February 1989. Optimistic, or bullish, newsletter writers dropped to 52.6 percent from a seven-month high of 55.2 percent last week.
Macy’s, NetApp Inc. and Cisco Systems Inc. reported results Wednesday. Of the 453 S&P 500 companies that have announced so far, 75 percent have beaten analysts’ income forecasts, data compiled by Bloomberg showed. Profits for the gauge will rise 4.7 percent in the third quarter and 6.2 percent in the final three months of the year, estimates show.