NEW YORK – A year and a day after the bankruptcy filing of Lehman Brothers Holdings Inc. sent the world economy into a tailspin, U.S. stocks advanced this morning on growing optimism about the global economic outlook.
The S&P 500 Index increased 0.6 percent to 1,058.98 at 11:22 a.m. on the New York Stock Exchange, according to Bloomberg News. The index reached its highest level in almost a year yesterday.
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Stocks on the rise today included Fortune Brands Inc., parent of local golf products maker The Acushnet Co., which added 6.8 percent after it reaffirmed its earnings outlook for the year and Goldman Sachs Group Inc. raised its rating on the company’s shares to “buy.” Other local gainers included CVS Caremark Corp., up 0.19 percent at 11:40 a.m., and Textron Inc., up 1.24 percent.
The optimism was boosted by high-profile votes of confidence in the economy. Federal Reserve Chairman Ben S. Bernanke said yesterday the recession was “very likely over,” although he warned of mediocre employment growth, while billionaire investor Warren Buffett said he saw signs the economy was responding to the stimulus efforts by the federal government and the central bank.
Buffett, who described the financial crisis an “economic Pearl Harbor” a year ago, today told CNBC the U.S. economy has “hit a plateau at bottom.”
“We have not bounced but we’ve quit going down,” Buffett, 79, said a day after announcing that he is continuing to buy U.S. equities. He later added: “We’re through the worst of it in residential real estate in all probability,” and said he does not expect a “double-dip” recession.
The MSCI World Index of 23 developed nations’ stock markets neared a one-year high today as it rose 1.1 percent, Bloomberg said. The index is up 64 percent since the market bottomed on March 9 and is now at its most expensive level since 2003, according to Bloomberg data.
“Investors have been embracing risk as they feel more comfortable about the global economy,” John Carey, a Boston-based money manager at Pioneer Investments, which oversees more than $200 billion worldwide, told Bloomberg.
“People feel more confident putting money into the stock market. There seems to be a better sentiment regarding big companies, such as G.E., that were under such a cloud during the peak of the credit crisis,” Carey said.
