By Jonathan Morgan and Katie Brennan Bloomberg News
NEW YORK -- U.S. stocks rose, with the Standard & Poor’s 500 Index extending a record, as investors analyzed earnings from companies including McDonald’s Corp. and awaited data on house sales.
The S&P 500 rose 0.1 percent to 1,694.08 at 9:31 a.m. in New York.
“Tapering concerns have eased with investors switching attention to an extremely busy second-quarter reporting week,” Richard Hunter, head of equities at Hargreaves Lansdown Plc in London, wrote in an e-mail. “Whereas the standout performers so far have been the U.S. banks, there have been some disappointing updates from the technology sector. Further clues will come with numbers from the likes of Facebook, Amazon and the currently beleaguered Apple.”
More than 150 S&P 500-listed companies, including Apple Inc., Amazon.com Inc. and Facebook Inc., report their earnings this week. Of the 106 companies on the gauge to have already reported quarterly results, 73 percent have exceeded analysts’ profit estimates and 53 percent have beaten sales projections, data compiled by Bloomberg show.
Bank of America Corp. and Morgan Stanley surged more than 5 percent last week as financial shares gained. Technology stocks posted the worst performance among the 10 groups in the S&P 500, as Google Inc. and Microsoft retreated following disappointing earnings.
The S&P 500 rallied 0.7 percent last week to a record, as Federal Reserve Chairman Ben S. Bernanke said the central bank remains flexible about the duration of its asset-purchase program. Fed stimulus and corporate earnings that have surpassed forecasts have helped fuel a surge in stocks worldwide, with the S&P 500 jumping 150 percent from its March 2009 low.
Investors have increasingly turned to stocks this month, as U.S. equity exchange-traded funds are getting money at the fastest rate since September 2008, while mutual funds that invest in U.S. equities had $4.55 billion of inflows during the week through July 10, ending seven consecutive weeks of withdrawals.
Individuals have 69 percent of their assets in mutual funds, almost a percentage point more than the average since 1992 and four points more than in 2012, Goldman Sachs Group Inc. said in a note to clients. Investors are demonstrating the “strongest risk appetite in five years,” according to the note dated July 19.
A report at 10 a.m. New York time may show U.S. house sales climbed in June to the highest level since November 2009. Sales of previously owned properties rose to a 5.25 million annualized pace from 5.18 million in May, according to the median forecast of 65 economists in a Bloomberg survey. A Commerce Department report on Wednesday will probably show purchases of new homes increased to a 485,000 pace last month, according to a separate Bloomberg survey.
In Asia, Japanese Prime Minister Shinzo Abe’s Liberal Democratic Party and its coalition partner New Komeito won at least 74 of the 121 upper-house seats that were contested in the weekend vote. The results strengthen Abe’s ability to carry out his policy of monetary easing, fiscal stimulus and deregulation.
The broadest rally in U.S. stocks since at least 1990 has lifted shares of everything from the smallest companies to the biggest banks, signaling the bull market for America’s largest corporations will last at least until the end of the year, if history is a guide.
The S&P 500’s advance to a record last week coincided with highs in the Russell 2000 Index of smaller companies, the Dow Jones Transportation Index, the S&P 500 Financials Index and a gauge of economically sensitive equities overseen by Morgan Stanley. Since 1990, the S&P 500 has gained for six months on average after those measures peaked, according to data compiled by Bloomberg.
While bears say the breadth shows indiscriminate buying just as profit growth slows and the Federal Reserve prepares to curtail stimulus, gains across stock measures have proved an accurate forecaster of performance. In four market tops during the last 23 years, small-cap stocks and the cyclical gauge never peaked after the S&P 500.