U.S. stocks climbed, with the S&P 500 Index edging closer to a record, bolstered by speculation borrowing costs will remain lower for longer amid moderate growth.
Companies that benefit from a sagging dollar were the strongest performers, with raw-material and industrial companies leading gains. Caterpillar Inc. increased 1.7 percent, extending its longest winning streak in two months, and copper miner Freeport-McMoRan Inc. added 3.1 percent. Energy producers erased an early rally, even as oil climbed to a 10-month high.
The S&P 500 rose 0.3 percent to 2,119.12 at 4 p.m. in New York, the highest since July 21, 2015 and 0.6 percent from a record.
“No matter what you throw at this market, it keeps wanting to go higher,” said Walter Todd, who oversees about $1.1 billion as chief investment officer for Greenwood Capital Associates LLC in South Carolina. “Sentiment, as has been well documented, is pretty bad and the market tends to inflict the most pain on the most people. And the most people it seems are underweight the market or out of the market.”
Federal Reserve Chair Janet Yellen’s remarks this week that the U.S. economy is making progress and indications that policy makers won’t prematurely raise interest rates have helped support stocks. Traders have cut back their bets for a Fed rate increase, now pricing in no chance of a boost in June, with the probability for July down to 18 percent from 53 percent a week ago.
Energy producers in the benchmark index slipped from the highest level since November, after their strongest back-to-back gains in three months. Advances in commodity-related shares have helped drive the S&P 500’s nearly 16 percent rebound from a 22-month low in February as crude recovered from a 12-year nadir. Raw-material companies climbed for a sixth day, the longest since October, as a gauge on the dollar extended declines to a one-month low.
The rally has been reinvigorated after losing momentum following the S&P 500’s four-month high on April 20. The index has climbed in eight of 11 sessions, racking up nearly all of this year’s 3.7 percent gain in the last two weeks. About 70 percent of stocks on the New York Stock Exchange closed yesterday above their average prices during the past 200 days, the most since July 2014.
Meanwhile, the main U.S. equity benchmark’s recent climb has been grinding, with the S&P 500 moving no more than 0.5 percent in either direction for a ninth straight day, the longest stretch since 2014.
The weakest monthly job gains since 2010 were a source of hesitation for investors last week, prompting the only setback for equities in the past six sessions. Further indications on the health of the economy are sparse this week, with data on U.S. wholesale inventories and consumer sentiment scheduled for tomorrow and Friday, respectively. A report from China today indicated exports are stabilizing, while the World Bank cut its 2016 global growth forecast.
“There’s definitely reason for the market to take a breather in conjunction with the notion that we’re near all-time highs,” said Frank Cappelleri, executive director at Instinet LLC. “Treading water at these levels to be honest would be pretty constructive.”
--With assistance from Roxana Zega and Lu Wang To contact the reporter on this story: Anna-Louise Jackson in New York at ajackson36@bloomberg.net. To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net, John Shipman, Alan Soughley
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