US STOCKS rose for the fourth session in a row yesterday as investors bet that companies will be able to surpass the low bar set for earnings season, leaving room for better-than-expected results that could drive the rally further.
The push higher in recent days has taken the benchmark S&P 500 to one per cent below its all-time closing high of 1,669.16 reached on
21 May. The gains also suggest that investors are becoming more comfortable with the prospect of the Federal Reserve slowing the pace of its economic stimulus, which has been a major driver of the equity rally this year.
Nine of the 10 S&P 500 industry sector indexes ended higher. Material and industrial shares recorded the biggest gains after Alcoa affirmed its global demand forecast for aluminum products when it reported results after Monday's closing bell. Alcoa’s release is traditionally viewed as the unofficial start to earnings season.
For the most part, analysts are expecting second-quarter results to be soft with weak sales, but expectations are for a pickup later in the year. Even so, investors are starting to think earnings expectations may have been ratcheted down too low.
Analysts expect S&P 500 firms’ earnings to grow 2.9 per cent in the second quarter from a year ago.
The Dow Jones industrial average gained 75.65 points, or 0.50 per cent, to end at 15,300.34. The Standard & Poor's 500 Index rose 11.86 points, or 0.72 per cent, to 1,652.32. The Nasdaq Composite Index climbed 19.43 points, or 0.56 per cent, to close at 3,504.26
New York Report