BLBG: U.S. Stocks Erase Losses as Economic Data Offset Fed
U.S. stocks erased losses after measures of leading indicators and regional manufacturing fueled optimism in the economy, offsetting comments from Federal Reserve Chair Janet Yellen on interest rates.
The Standard & Poor’s 500 Index (SPX) rose 0.2 percent to 1,864.32 at 10:10 a.m. in New York. The Dow Jones Industrial Average added 33.07 points, or 0.2 percent, to 16,255.24. Trading in S&P 500 stocks was 4 percent above the 30-day average at this time of day.
The S&P 500 fell 0.6 percent yesterday after Yellen said the central bank’s stimulus program could end this fall and benchmark interest rates could rise about six months later. The Fed had previously said it would not raise rates for a considerable period, without specifying a time frame.
Quarterly Fed forecasts also showed more officials predicting that the benchmark rate, now close to zero, will rise to at least 1 percent at the end of 2015 and 2.25 percent a year later. The central bank said it would trim its monthly bond purchases by $10 billion to $55 billion.
Three rounds of Fed stimulus and low interest rates have helped boost the equity gauge as much as 178 percent from a 12-year low as U.S. stocks enter the sixth year of a bull market.
Yellen also said harsh winter weather was a significant reason for weakness this year in economic data from housing to jobs.
Data today showed the February index of leading economic indicators added 0.5 percent, more than the 0.2 percent estimated by economists.
Philly Fed
The Philadelphia Fed’s manufacturing gauge rose to 9.0 in March from minus 6.3 the prior month.
Separate data showed purchases of previously owned homes declined in February to the lowest level since July 2012.
Jobs data indicated the number of Americans filing applications for unemployment benefits held last week near the lowest level in almost four months, a sign the labor market continues to strengthen.
Americans were most pessimistic on the outlook for the economy in March than at any time in four months, a sign the effects of harsh winter weather are still rippling through the U.S., data from the Bloomberg Consumer Comfort Index showed today.
The Chicago Board Options Exchange Volatility Index (VIX), a gauge for U.S. stock volatility, rose 2 percent to 15.42 for a second day of gains.
Eight of the 10 main industries in the S&P 500 retreated with utility and energy shares losing at least 0.5 percent for the biggest declines. Phone stocks rose 0.9 percent for the best performance.
Guess? Inc. declined 5.4 percent to $27.22 after forecasting earnings for fiscal-year 2015 of $1.40 to $1.60 a share, missing the average analyst estimate of $2.03 a share. The apparel maker predicted a first-quarter net loss of 5 cents to 9 cents a share.
Jabil Circuits Inc. fell 1.2 percent to $18.05. The maker of electronics for Apple Inc. and Cisco Systems Inc. estimated fiscal-year 2015 earnings of $1.65 to $1.95 a share. Analysts on average forecast $1.63 a share.
ConAgra Foods Inc. added 1.1 percent to $29.92. The maker of Orville Redenbacher’s popcorn and Banquet frozen meals reported third-quarter profit that surpassed estimates and reaffirmed its full-year target for adjusted earnings.
To contact the reporters on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net; Joseph Ciolli in New York at jciolli@bloomberg.net
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Jeremy Herron, Srinivasan Sivabalan
