Oct. 29 (Bloomberg) -- U.S. stocks rose, with benchmark indexes climbing to records, as earnings from Pfizer Inc. to Xylem Inc. beat estimates and data indicating slower growth fueled bets the Federal Reserve will maintain stimulus.
Pfizer, the world’s biggest drugmaker, jumped 1.7 percent as the company cut costs and increased drug sales. Xylem surged 12 percent after the water company whose pumps helped clean tunnels in New York flooded by Hurricane Sandy raised its annual earnings forecast. International Business Machines Corp. rose 2.7 percent as the firm added $15 billion to its stock buyback fund.
The Standard & Poor’s 500 Index gained 0.6 percent to 1,771.95 at 4 p.m. in New York, its third straight record. The Dow Jones Industrial Average jumped 111.42 points, or 0.7 percent, to 15,680.35, surpassing its all-time closing high from Sept. 18. About 6 billion shares changed hands on U.S. exchanges, in line with the the three-month average.
“It still seems that the Fed has created this good news is bad news, bad news is good news scenario,” Randy Bateman, who oversees $15 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, said by telephone. “The anticipation is that the Fed will retain its purchasing of $85 billion in monthly Treasury and mortgage securities, which is going to continue to help the housing market. That will be taken fairly well by the market.”
The S&P 500 climbed in 13 of the past 15 sessions, as companies beat estimates in the current earnings reporting season and signs of slower economic growth fueled bets the Fed will maintain stimulus measures after its two-day meeting that started today. The rally has pushed the index up 24 percent this year, leaving it poised for the best annual gain in a decade.
The 16-day government shutdown earlier this month took at least $24 billion out of the economy and will spur the Fed to wait until March to taper, a Bloomberg survey showed this month. The central bank’s policy makers meet today and tomorrow.
Data today showed retail sales dropped 0.1 percent last month, restrained by the biggest decrease at auto dealers since October 2012. Wholesale prices unexpectedly fell in September as food costs retreated. Inflation has been running below the Fed’s 2 percent objective in the near-term, giving policy makers room to maintain monetary stimulus.
A separate report showed confidence among U.S. consumers declined in October by the most since August 2011 as the budget impasse and debt-ceiling negotiations in Washington took a toll on outlooks.
Weaker-than-forecast data yesterday on factory output and sales of previously owned homes added to concern that growth slowed in the weeks before the shutdown. Home prices in 20 U.S. cities rose in August from a year ago by the most since February 2006, the S&P/Case-Shiller index indicated today.
The Fed’s stimulus has helped propel the S&P 500 up more than 160 percent from a 12-year low in 2009. While the rally has lifted equity valuations to a four-year high, with the index trading at 16 times estimated operating earnings, that’s still below the multiples at the market’s two previous peaks, when the ratio reached 16.5 in October 2007 and 25.7 in March 2000, data compiled by Bloomberg show.
Some 39 members of the S&P 500 released results today, including Pfizer and Goodyear Tire & Rubber Co. Earnings for the broad equity gauge probably increased 3.7 percent in the third quarter as sales climbed 2.4 percent, according to analysts’ estimates compiled by Bloomberg. Profits have grown by an average of 5.9 percent among the 290 companies that have reported so far, while sales have gained 3.6 percent.
“We’re seeing some more stability in some of the international markets for exporters and continued modest improvement here in the United states,” Paul Mangus, head of equity strategy and research for Wells Fargo Private Bank in Charlotte, North Carolina, said in a phone interview. His firm manages $170 billion. “You have revenue coming in sluggish, but that was pretty much as expected. Margins have come in a little higher than expectations, so there’s a reason for an improvement in investor confidence.”
The Chicago Board Options Exchange Volatility Index, the gauge known as VIX that measures options traders’ estimate of future price swings in the S&P 500, rose 0.8 percent to 13.41. The gauge has lost 19 percent so far this month.
All 10 main S&P 500 groups advanced today, with phone and consumer-staples companies rising at least 0.9 percent to pace gains. AT&T Inc. jumped 2 percent to $36.27 for the second- biggest advance in the Dow.
Pfizer rose 1.7 percent to $31.25. Higher sales of its top vaccine and pain drugs also boosted profit. Pfizer is pushing to expand sales of Prevnar, a pneumococcal vaccine and its second- biggest product, since losing marketing exclusivity for Lipitor, once the world’s top-selling drug.
Xylem surged 12 percent to $32.53 for the biggest gain in the S&P 500 and the most since being spun off from ITT Corp. two years ago. A 6 percent rise in orders in the third quarter, an ozone project in China and a pumping and control system for the Singapore Transport Authority helped Xylem post earnings and sales that beat analysts’ estimates.
Masco Corp. climbed 2.6 percent to $21.47. The maker of faucets and kitchen and bath cabinets said it had sales of $2.2 billion last quarter, beating the average estimate in a Bloomberg poll of analysts for revenue of $2.1 billion. Adjusted earnings of 27 cents a share also beat projections.
Michael Kors Holdings Ltd. climbed 1.3 percent to $77.38. The luxury-goods company founded by the designer of the same name will replace NYSE Euronext in the S&P 500 after the close of trading on Nov. 1, S&P said. NYSE Euronext, the biggest U.S. stock exchange owner, is being acquired by Atlanta-based IntercontinentalExchange Inc.
United Continental Holdings Inc. jumped 5.6 percent to $33.91, the highest in a month. The carrier said about 30,000 United employees covered by the International Association of Machinists and Aerospace Workers union reached an agreement that provides immediate wage increases. The Bloomberg U.S. Airlines Index jumped 1.4 percent to extend a six-year high.
IBM rose 2.7 percent to $182.12 for the biggest advance in the Dow. The world’s largest computer-services firm now has $20.6 billion in its repurchase program and will request more next October, it said.
Apple Inc. lost 2.5 percent to $516.68. The maker of the iPhone said revenue in the current quarter will be $55 billion to $58 billion, compared with the $55.5 billion average of analysts’ estimates. Gross margins will be 36.5 percent to 37.5 percent, versus the 38 percent projection.
Aetna Inc. slipped 1.7 percent to $60.75. The third-biggest U.S. health insurer said quarterly profit rose 3.9 percent, boosted by the acquisition of rival Coventry Health Care Inc. Insurer shares have slid this month after the top two carriers, UnitedHealth Group Inc. and WellPoint Inc., gave outlooks for next year that disappointed investors.
The industry faces falling payments from the U.S. Medicare program. Technical issues with the Obamacare rollout also have clouded prospects for new business from the federal health-care law.
Goodyear plunged 5.9 percent to $20.76. The company reported third-quarter sales that missed analyst estimates and said consumer demand for original equipment in Europe, the Middle East and Asia may fall 5 percent in the rest of 2013.
Cummins Inc. fell 5.2 percent to $127.90. The engine maker experienced “weak demand for capital goods in most of our major markets,” Chief Executive Officer Tom Linebarger said in a statement. Third-quarter profit of $1.90 a share missed analysts’ average estimate of $2.11, as growth in China and Brazil was offset by weak demand in India, Australia and Europe, according to the statement.
Caterpillar Inc., the maker of construction and mining equipment, slid 0.3 percent to $84.07 for the steepest drop in the Dow. Joy Global Inc., which manufactures machines for extracting ores and minerals, lost 1.6 percent to $57.78, halting a five-day rally.
MeadWestvaco Corp. plunged 9.4 percent to $35.13 for the biggest slide in the S&P 500. The packaging maker reported adjusted earnings that fell short of estimates.
Seagate Technology Plc lost 3.2 percent to $48.25. The disk drive maker forecast fiscal second-quarter sales below analyst estimates and said it expects demand for its products to remain similar to prior quarters.
American Capital Agency Corp. fell 8.4 percent to $21.87. The real-estate investment trust that buys mortgage debt reported third-quarter spread earnings per share of 58 cents, compared with analysts’ forecast of 81 cents.
A data feed interruption that prevented prices for Nasdaq OMX Group Inc.’s benchmark U.S. stock indexes from being disseminated for almost an hour today was caused by human error, the company said.
The Nasdaq Composite Index and Nasdaq-100 Index were among the measures that stopped updating at about 11:53 a.m. New York time, according to data compiled by Bloomberg. They started moving again at 12:45 p.m., the data show. Individual stocks listed by Nasdaq OMX, such as Apple Inc. and Google Inc., had continued to trade during the outage. Nasdaq shares rose 0.8 percent to $36.01 for a fifth straight gain that extended a five-year high.
--With assistance from Alexis Xydias in London. Editors: Jeremy Herron, Jeff Sutherland