Most in Three Weeks After FiveDay Selloff MoneySmart The Buffalo News

Post on: 27 Июль, 2016 No Comment


The Standard & Poors 500 Index rallied the most in three weeks, halting a five-day selloff, as data stoked optimism on the economy and Federal Reserve minutes did little to change investor expectations on interest rates.

The S&P 500 jumped 23.29, or 1.2 percent, to 2,025.90, after plunging 4.2 percent over the previous five days. The Dow Jones Industrial Average climbed 212.88 points, or 1.2 percent, to 17,584.52. More than 7 billion shares changed hands on U.S. exchanges, 1.6 percent above the three-month average.

We had some good economic news and the market got tired of going down, Randy Bateman, the chief investment officer of Huntington Asset Advisors, which manages about $2.3 billion in funds, said by phone.

Before Wednesday, U.S. equities were off to the worst start for any year since 2008, with the S&P 500 dropping 2.7 percent in the first three sessions of 2015. The losses trimmed the indexs return since the bull market began in March 2009 to 196 percent and followed an advance of 11.4 percent in 2014.

Equities maintained gains Wednesday after the central bank released minutes from their December meeting. Most Fed officials agreed their new policy guidance means they are unlikely to raise interest rates before late April, and a number expressed concern inflation could remain too low.

In a statement following that meeting, the Fed pledged to be patient in its approach to raising rates, while Chair Janet Yellen said the central bank will probably hold rates near zero through at least the first quarter.

Central bank officials said the faltering global economy may be a threat to the U.S. while concluding that those risks were nearly balanced by positive developments.

Several policy makers said consumer and business confidence and payroll gains suggest the economy may end up showing more momentum than anticipated, while a few others said the boost to spending from cheaper oil and gas prices could turn out to be quite large.

Investors have been overly pessimistic given the underlying fundamentals, Karyn Cavanaugh, the New York-based senior market strategist at Voya Investment Management LLC, said by phone. The underlying fundamentals are still very strong. Todays ADP payroll report was positive, and central to everything is the labor market. If the labor market is strong, the economy is doing OK and this does bode well for Friday.

The bull market in equities, approaching its seventh year, has endured 30 declines of 4 percent or more. Last year, the benchmark gauge advanced 11 percent after experiencing three pullbacks of more than 4 percent and then recovering all the losses each time within one month.

Losses in equities have pushed the S&P 500s price-earnings ratio down to 17.9 from as high as 18.5 on Dec. 29, according to data compiled by Bloomberg. The decade average is 16.3. Stocks are trading at about 1.8 times annual sales, compared with an average of 1.4 over the last 10 years.

Stocks are cheap relative to bonds and global earnings should climb by 9 percent this year, Citigroup Inc. wrote in a note. The firm boosted its rating on U.S. equities to neutral from underweight, similar to sell, citing an increase in preference for growth.

Anadarko Petroleum Corp. jumped 1.6 percent, pacing gains among energy producers in the S&P 500. Halliburton Co. rallied 2.7 percent and Exxon Mobil Corp. increased 1 percent.

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