By Sofia Horta e Costa and Alex Barinka Bloomberg News
NEW YORK - U.S. stocks rose, putting the Standard & Poor’s 500 Index on track for a fourth day of gains, amid increased optimism about economic growth as the corporate earnings season began.
The S&P 500 climbed 0.4 percent to 1,646.26 at 9:30 a.m. in New York. Alcoa Inc. advanced 1.1 percent after posting earnings yesterday that beat analysts’ estimates and maintaining its forecast for global aluminum demand. The aluminum producer was the first member of the Dow Jones Industrial Average to report results.
“A positive earnings season would help in an environment where data may still not provide an obvious picture of the U.S. economy,” said Luca Paolini, who helps oversee about $66 billion in equities as chief strategist at Pictet Asset Management Ltd. in London. “Profit margins have proven to be relatively resilient. The most critical issue we are looking at is company guidance for the next few quarters. We want to see that companies have the confidence to increase capex.”
The S&P 500 has gained 1.6 percent in the past three days, as better-than-estimated economic data on employment and manufacturing tempered concern over a scaling back of Federal Reserve stimulus.
Investors will gain more insight into the central bank’s plans tomorrow when Chairman Ben Bernanke speaks and the Federal Open Market Committee publishes minutes from its June meeting. He said on June 19 the Fed may pare its asset-purchase program this year and end it in mid-2014 if growth meets estimates.
The Fed stimulus and better-than-estimated corporate earnings have helped fuel a rally that lifted the S&P 500 by as much as 147 percent from its bear-market low in 2009. The start of the earnings season, which is traditionally marked by Alcoa’s report, has been a buying opportunity during that time. The S&P 500 has risen 13 of the 17 times Alcoa has posted results during the bull market, adding an average 1.6 percent in the two weeks following the company’s release.
Earnings at companies listed on the S&P 500 rose 1.8 percent last quarter, down from a projection of 8.3 percent six months ago, according to more than 11,000 analyst estimates compiled by Bloomberg. Lower expectations helped about 73 percent of the companies in the benchmark measure exceed forecasts by an average of 5.1 percent for the first three months of the year, Bloomberg data show. There are no S&P 500 companies scheduled to report today.