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Monday, 3 June 2013
U.S. Stocks Rise as Fed Official Says FOMC Backs Stimulus
By Nikolaj Gammeltoft - Jun 4, 2013 12:01 AM GMT+0400
U.S. stocks rose, with the Standard & Poor’s 500 Index erasing earlier losses, after Federal Reserve Bank of Atlanta President Dennis Lockhart said central bank officials are committed to record stimulus measures.
The S&P 500 rose 0.6 percent to 1,640.24 at 4 p.m. in New York.
Traders work on the floor of the New York Stock Exchange in New York. Photographer: Jin Lee/Bloomberg
“There certainly seems to be an acute fixation on the timing of any adjustment to the asset purchase program and I guess I would just encourage everyone to not lose sight of the bigger picture,” Lockhart said today in a Bloomberg Television interview in New York with Michael McKee. “Any adjustment is not a major policy shift. The high level of accommodation will stay in place.”
The S&P 500 (SPX)declined 1.1 percent last week, with stocks alternating between gains and losses during the four sessions, amid data showing uneven performance in the economy. Federal Open Market Committee members have been weighing economic data to determine whether to expand or taper bond purchases that, along with better-than-expected corporate earnings, have propelled the bull market in U.S. equities into a fifth year and driven the S&P 500 up 142 percent from a 12-year low in 2009.
Data today fueled concern that economic growth could slow, as a report from the Institute for Supply Management showed manufacturing unexpectedly contracted in May at the fastest pace in four years. A separate report from the Commerce Department showed construction spending climbed in April, as private projects rose and public spending slumped.
“The data we’re receiving are still very mixed,” Lockhart said. “The ISM report this morning is a good example. I’m not getting a clear picture of an economy that really is tracking with considerable momentum.”
The S&P 500 retreated as much as 0.5 percent earlier in the day amid the manufacturing report.
“Bad news can only be good news for so long for stock prices,” John Lynch, the Charlotte-based regional chief investment officer for Wells Fargo Private Bank, said by telephone. His firm manages $170 billion. “At some point it will impact earnings and market levels.”
The S&P 500 gained 2.1 percent in May, pushing its winning streak to seven months of advances, the longest stretch since September 2009. The rally, combined with the index’s strong start to the year, may indicate further gains for stocks in June, according to Sam Stovall, S&P’s New York-based chief equity strategist.
A seven-month winning streak has happened 13 times since 1945 and it has led to advances of 0.4 percent on average in the eighth month as stock prices rose 62 percent of the time, Stovall wrote in a note today. The S&P 500’s advances in January and February may also help as the benchmark U.S. equity index has returned annual gains in each of the 26 years with such a positive start since World War II. The strong starts to the year have been followed by increases of 1 percent in June compared with its normal flat performance.
“Could sell in May have started in the end of the month, rather than the usual? One could easily infer that from the performance of the last three days,” the strategist wrote, referring to the gauge’s 1.8 percent drop in the month’s closing days. “However, history says, but does not guarantee, that the S&P 500’s performance in June could surprise to the upside.”