BLBG: U.S. Stock-Index Futures Advance After Bernanke Comments
U.S. stock-index futures jumped, indicating the Standard & Poor’s 500 Index will advance for a sixth straight day, after Federal Reserve Chairman Ben S. Bernanke backed sustained monetary stimulus.
JPMorgan Chase & Co. and Wells Fargo & Co. jumped at least 1.2 percent as banks rallied. Barrick Gold Corp., Freeport-McMoRan Copper & Gold Inc. and Newmont Mining Corp. led gold producers higher as the precious metal’s price soared. Advanced Micro Devices Inc. rose 6.3 percent as Bank of America Corp. and Canaccord Genuity Corp. recommended that investors buy the shares.
Futures on the Standard & Poor’s 500 Index expiring in September gained 1 percent to 1,664.5 at 8:36 a.m. in New York. The benchmark gauge is up 16 percent for the year, and within 1 percent of a record high set on May 21. Contracts on the Dow Jones Industrial Average jumped 124 points, or 0.8 percent, to 15,367 today.
“The Fed is emphasizing that policy is going to remain accommodative in the near term,” Tim Gibbens, an investment manager at Alliance Trust Plc, said by phone from Dundee, Scotland. “It’s a highly flexible and data-dependent stance which can mean that bond purchases won’t necessarily stop this year. They’re trying to manage market expectations after being surprised at the reaction after May.”
Bernanke spoke after the release of minutes from the central bank’s June 18-19 meeting showed about half of the 19 participants in the Federal Open Market Committee wanted to halt the $85 billion in monthly bond purchases by the end of this year. The minutes also showed many Fed officials wanted to see more signs that employment is improving before agreeing to trim the asset-buying program known as quantitative easing.
Bernanke Speaks
The minutes were released during regular market hours yesterday, and U.S. equities ended the day little changed. After the close of trading, Bernanke said low inflation and high unemployment mean the Fed needs to continue with its stimulus measures.
“Highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy,” Bernanke said in response to a question after a speech in Cambridge, Massachusetts.
The number of Americans filing for unemployment benefits unexpectedly increased to a two-month high. First-time claims rose by 16,000 to 360,000 in the week ended July 6 from a revised 344,000, Labor Department figures showed today in Washington. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 340,000. Claims are difficult to adjust in July for seasonal events such as vehicle plant shutdowns and the Independence Day holiday, a Labor Department spokesman said.
Banks Gain
JPMorgan added 1.3 percent to $55.56 and Wells Fargo gained 1.2 percent to $42.58. The two lenders report second-quarter results tomorrow, the first of the six largest U.S. banks.
Analysts expect the group to report an average increase in profits of 20 percent, ranging from 9 percent at San Francisco-based Wells Fargo to 55 percent at Goldman Sachs Group Inc., according to data compiled by Bloomberg.
Earnings at companies listed on the S&P 500 rose 1.8 percent last quarter, down from a projection of 8.7 percent six months ago, according to more than 11,000 analyst estimates compiled by Bloomberg. Lower expectations helped about 73 percent of the companies in the benchmark measure exceed forecasts by an average of 5.1 percent for the first three months of the year, Bloomberg data show.
Earnings Season
Alcoa Inc. kicked of the reporting season July 8, posting adjusted profit that exceeded analyst estimates. The start of earnings season, typically demarcated by Alcoa’s report, has been a buying opportunity since the bull market began in March 2009. The S&P 500 has risen 13 of the 17 times Alcoa has reported results since then, adding an average 1.6 percent in the two weeks following the aluminum producer’s earnings release.
Barrick Gold rose 4.7 percent to $14.66 and Freeport advanced 2.5 percent to $28.28. Gold futures rallied 3 percent for a fourth day of gains. Newmont Mining added 3.7 percent to $27.60 after reaffirming its forecast for gold and copper production this year in a statement late yesterday.
AMD (AMD) added 6.3 percent to $4.23. Bank of America’s Merrill Lynch unit and Canaccord raised their ratings on the maker of processors for personal computers to buy from underperform, and to buy from hold, respectively. Canaccord said increased production of games consoles may boost demand for its hardware in the third quarter.
Hewlett-Packard Co. (HPQ) increased 1.4 percent to $26.30 after a report showed its sales of personal computers in the U.S. fell less than 1 percent in the second quarter. Sales for all PC makers gained 8.5 percent from the previous quarter and posted their smallest year-on-year drop of the last seven quarters, according to market researcher Gartner Inc.
To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net
To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net
