S&P 500 Rallies to Record After Japan Boosts Stimulus

U.S. stocks jumped, sending benchmark indexes to records, as an unexpected boost in stimulus from the Bank of Japan spurred optimism in the global economy.

Energy companies led gains, with Exxon Mobil Corp. and Chevron Corp. each rising 2.4 percent. LinkedIn Corp. soared 13 percent after third-quarter sales exceeded estimates. GoPro Inc. jumped 13 percent after its prediction for fourth-quarter profit surpassed analysts’ projections. Starbucks Corp. fell 2.3 percent after posting disappointing quarterly revenue.

The Standard & Poor’s 500 Index advanced 1.2 percent to 2,018.05 at 4 p.m. in New York, topping its previous all-time closing high of 2,011.36 on Sept. 18. The Dow Jones Industrial Average rallied 195.1 points, or 1.1 percent, to 17,390.52, also an all-time high. The Nasdaq Composite Index surged 1.4 percent to the highest since March 2000.

“The BOJ move is the icing on the cake,” said Patrick Moonen, who helps oversee $241 billion as a senior strategist at ING Investment Management. “Fundamentals are still good. Corporate earnings are better than expected, U.S. macro data came in strong and even the data in the euro zone show signs of stabilization.”

U.S. equities joined a global rally as Japan’s Government Pension Investment Fund said it will put half its holdings in local and foreign stocks, double previous levels, and invest in alternative assets. The Bank of Japan raised its annual target for monetary expansion to 80 trillion yen ($724 billion) from as much as 70 trillion yen. The Topix index soared the most in a year, leading a rally in equities around the world.

Data Watch

Better-than-forecast corporate earnings and optimism in the economy helped the S&P 500 rebound after a 7.4 percent dip from Sept. 18 to Oct. 15. The gauge advanced 2.3 percent in October, extending its gain this year to 9.2 percent.

The Russell 2000 Index rallied 6.5 percent in October for its best month since July 2013. The Dow gained 2 percent in the month and the Nasdaq Composite Index jumped 3.1 percent.

The S&P 500 climbed 2.7 percent this week after posting its best week since January 2013 through Oct. 24. Equities rose yesterday after data showed the U.S. economy expanded faster than forecast last quarter, signaling growth is strong enough to withstand the end of Federal Reserve bond buying.

Data today showed consumer spending in the U.S. unexpectedly dropped in September as incomes rose at the slowest pace of the year. The Institute for Supply Management-Chicago Inc.’s business barometer rose to 66.2 in October from 60.5 in the prior month, according to a report today. A reading less than 50 signals contraction.

‘Positive Headlines’

The Thomson Reuters/University of Michigan final October index of consumer sentiment increased to 86.9 from 84.6 a month earlier.

“When we have some positive headlines out there, the market only focuses on that aspect,” Jonathan Corpina, senior managing partner at Meridian Equity Partners who works on the floor of the New York Stock Exchange, said by phone. “Since we’ve bounced off those lows 7, 8, 9 percentage points ago, the market seems to be determined to hit new highs.”

The Chicago Board Options Exchange Volatility Index fell 3.4 percent to 14.03, capping its second weekly drop since closing at the highest since June 2012 on Oct. 15. About 8.3 billion U.S. shares changed hands today, 27 percent higher than the three-month average.

All 10 of the main industries in the S&P 500 advanced. Raw-materials shares climbed 1.9 percent and while technology stocks rose 1.8 percent for the biggest gains after energy companies.

Market Movers

Energy shares increased 2 percent even as oil continued a selloff. Exxon surged 2.4 percent to $96.71 after unexpectedly boosting profit last quarter as lower crude prices helped its refining business.

Chevron climbed 2.4 percent to $119.95 as third-quarter net income rose for the first time in three years. Chevron warned investors in August that full-year output will be 1 percent to 2 percent below the company’s previous estimate.

LinkedIn gained 13 percent to $228.96. New business lines including news content boosted third-quarter revenue by 45 percent to $568.3 million. That beat the $557.7 million average forecast of analysts surveyed by Bloomberg. Profit excluding some costs also beat estimates.

GoPro surged 13 percent to $77.10 after predicting fourth-quarter adjusted earnings of 65 cents to 69 cents a share. Analysts on average estimated 53 cents. The maker of cameras used in action sports also posted better-than-estimated third-quarter sales and profit, and said it will make a decision about returning cash to shareholders.

Starbucks dropped 2.3 percent to $75.56. The world’s biggest coffee-shop chain posted fiscal fourth-quarter revenue of $4.18 billion, missing the $4.24 billion average analyst estimate, as competition intensified.

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