American stocks are outperforming global equities by the most in fourteen years amid better-than-estimated corporate earnings and speculation the Federal Reserve will act to stimulate the world’s largest economy.
The CHART OF THE DAY shows that the Standard & Poor’s 500 Index has risen 12 percent this year, compared with a 6.1 percent gain in the MSCI World Excluding United States Index. That’s the biggest outperformance since 1998, according to data compiled by Bloomberg.
“The U.S. is the best house in a bad global economic block,” E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia, said in a phone interview. His firm manages about $112 billion. “Corporate results have been better than expected. Still, while the most recent jobs data beat estimates, it’s not good enough. So quantitative easing is an open question,” he said, referring to asset purchases to stimulate the economy.
The S&P 500 has rallied 26 percent during the past 12 months. The Stoxx Europe 600 Index is up 22 percent since August 2011, while the MSCI Asia Pacific Index rose 1.4 percent.
About 72 percent of S&P 500 companies reporting second-quarter results have beaten analysts’ earnings estimates, according to data compiled by Bloomberg. At the same time, reports showed U.S. manufacturing unexpectedly contracted for a second month in July and the unemployment rate has remained above 8 percent since February 2009.
Fed Chairman Ben S. Bernanke told a Senate panel last month U.S. policy makers are “looking for ways to address the weakness in the economy should more action be needed to promote a sustained recovery in the labor market.”