U.S. and European stocks gained and yields on 30-year Treasuries rose to a two-month high as lower- than-estimated inflation bolstered Federal Reserve Chairman Ben S. Bernanke’s case that more stimulus may be needed to safeguard the economy and American retail sales beat projections. The Standard & Poor’s 500 Index rallied 0.5 percent to 1,179.30 and the Stoxx Europe 600 Index advanced 0.1 percent at 9:38 a.m. in New York. Treasury 30-year bonds dropped, driving yields up as much as eight basis points to 4 percent. The Dollar Index, which measures the U.S. currency against six major counterparts, pared its loss to 0.1 percent from 0.7 percent. Gold futures slumped 0.4 percent to $1,371.90 an ounce. Bernanke said the central bank may expand asset purchases in a technique known as quantitative easing because inflation is too low and unemployment is too high. Labor Department data released 15 minutes after he spoke showed the U.S. consumer index rose 0.1 percent in September, half the median economist estimate. Retail sales increased 0.4 percent, beating the 0.6 percent growth projection, according to another report. Stocks have surged worldwide amid speculation the Fed will act to prevent the second recession in three years. “He’s making the case that QE2 is a foregone conclusion,” said Frank Ingarra, a Stamford, Connecticut-based money manager at Hennessy Advisors Inc. “Everyone thinks the market will be off to the races. The combination of CPI not showing any inflation and good retail sales numbers kind of hit it up.” Best September The S&P 500 posted its biggest September rally since 1939 and has risen 5.9 percent this month amid speculation the Fed will announce asset purchases after policy makers meet in November. The central bank bought about $1.73 trillion in government debt and mortgage securities in a 2009 program and about $44 billion of Treasuries since the second round of buying began Aug. 17 to keep borrowing costs low and bolster the housing market. Eight of ten industries in the S&P 500 rallied today, led by technology companies after Google Inc. and Advanced Micro Devices Inc. beat profit forecasts. Google shares surged 10 percent, while AMD climbed 0.9 percent. Seagate Technology Plc jumped 17 percent after people with direct knowledge of the situation said the world’s biggest disk-drive maker is in buyout talks with TPG Capital and KKR & Co. More than 70 percent of S&P 500 companies have beaten the average analyst earnings estimate during the past five quarters, the longest streak in Bloomberg data going back to 1993. To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Elizabeth Stanton in New York at estanton@bloomberg.net. To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

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