U.S. stocks rose for a fifth day to extend records, as speculation grew for looser global monetary policies while a better-than-forecast profit from JPMorgan Chase & Co. boosted optimism for bank earnings.
JPMorgan climbed 2.5 percent to lead banks higher after the group yesterday snapped its longest rally in three months. Citigroup Inc. and Bank of America Corp. increased at least 1.8 percent. Yum! Brands Inc. advanced 3.3 percent after its earnings beat estimates and the restaurant-chain operator raised its outlook.
The S&P 500 Index added 0.7 percent to 2,166.80 at 10:28 a.m. in New York, on track for its longest winning streak in four months. The Dow Jones Industrial Average rose 143.33 points, or 0.8 percent, to 18,515.45. The Nasdaq Composite Index gained 0.6 percent to a more than six-month high. Trading volume in S&P 500 shares was 3 percent above the 30-day average for this time of day.
"Second quarter earnings have been widely advertised as weak, so any positive results will help boost the stock market," said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $ 110 billion. "We're seeing a worldwide phenomenon of negative interest rates, which is driving money into the equity markets. The path of least resistance at this point is to the upside."
Global equities climbed Thursday as speculation grew that Japan's Prime Minister Shinzo Abe is contemplating so-called helicopter money, which involves the central bank directly funding government spending. The Bank of England left its key rate at a record low and signaled it's readying stimulus for August as the economy reels from Britain's vote to leave the European Union.
U.S. share prices added almost $ 2 trillion since June 27, an amount that ranks among the biggest increases in equity value, as easing concern about economic growth and optimism over earnings combines with speculation the Federal Reserve will hold off raising rates. The S&P 500 climbed in nine of the last 11 days, erasing a 5.3 percent plunge following the Brexit referendum. Should the gauge reach a record for a fourth straight day, it will be the longest streak since 2014.
Injecting a cautionary note into run-up today, the chief executive of the world's largest asset manager said the current rally may not be justified and won't last unless earnings pick up. "If we don't see better-than-anticipated corporate earnings I think the rally will be short lived," BlackRock Inc.'s Laurence D. Fink said in an interview.
While JPMorgan's results exceeded predictions, its quarterly profit fell 1.4 percent in a period where banks are expected to be among the weaker links. Analysts project a 5.7 percent earnings decline at S&P 500 firms in the second quarter, which would make it a fifth straight drop, the longest streak since 2009. Wells Fargo & Co. and Citigroup Inc. are among firms posting results tomorrow.
Also on the minds of investors and Fed officials is the vitality of U.S. growth. A Citigroup gauge that tracks the degree to which data are exceeding economist projections has jumped to the highest level since January 2015. A report today showed wholesale prices rose more than forecast in June, paced by the biggest jump in fuel costs in a year. A separate measure showed the number of applications for unemployment benefits last week held at the lowest level since mid-April.
Meanwhile, odds of a 2016 Fed rate increase have risen after better-than-estimated June payrolls and as equities reached all-time highs. Traders are pricing in a 40 percent chance for a move by December, up from 12 percent a week ago when minutes from the central bank's last meeting signaled policy makers saw less need to tighten.
"There's hope and anticipation of central bank support globally and earnings are improving," said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva, which oversees 34 billion Swiss francs ($ 35 billion). "The consensus now is no Fed hike and that keeps the dollar from going higher, which in turn helps equities. Earnings so far have been good."
In Thursday's trading, nine of the S&P 500's 10 main industries rose, with banks boosting financials to a 1.1 percent gain, while surging airline and railroad stocks lifted industrials 1 percent. Utilities slipped for the third time in four days, after reaching the highest level ever last week.
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