Stocks, oil and copper rallied on improving earnings forecasts at companies from United Parcel Service Inc. to Caterpillar Inc. and accelerating growth in European manufacturing and services industries. The dollar fell and two-year Treasury yields rebounded from a record low. The Standard & Poor’s 500 Index gained 1.4 percent to 1,084.24 at 9:34 a.m. in New York, erasing yesterday’s drop. The Stoxx Europe 600 Index climbed 1.5 percent, with banks and industrial companies leading. Oil gained to almost $78 a barrel and copper advanced for a fourth day. The Dollar Index, which gauges the currency against six U.S. trading partners, fell 0.7 percent. The two-year yield rose 2 basis points to 0.58 percent.
All 10 industries in the S&P 500 advanced as EBay Inc. and AT&T Inc. also joined the 85 percent of S&P 500 companies that topped analysts’ earnings estimates so far in the second-quarter reporting season, according to data compiled by Bloomberg. The unexpected acceleration in manufacturing and service industries bolstered optimism that Europe’s economy is growing as regulators prepare to release the results of bank stress tests.
“The earnings guidance from some of the bigger global companies is looking better,” said Mike Morcos, senior money manager at Old Second Wealth Management in Aurora, Illinois, which oversees about $1.1 billion. “The market is in a battle between fear and optimism, and today we have some positive news which indicate it may not all be doom and gloom.”
The S&P 500 rebounded after yesterday ending a two-day rally when Federal Reserve Chairman Ben S. Bernanke’s told the Senate Banking Committee that the economic outlook is “unusually uncertain,” without offering specific plans to stimulate growth. Bernanke is scheduled to speak to U.S. lawmakers for a second day today, and reports may show sales of existing homes decreased and leading indicators fell, according to economists surveyed by Bloomberg.
