LITTLE ROCK — U.S. stocks rose Monday, sending the Standard & Poor’s 500 Index to a fourth straight gain, after the Group of 20 nations pledged to avoid “competitive devaluation” of currencies and investors bet the Federal Reserve will announce further bond purchases next week.
DuPont Co., Kraft Foods Inc. and Walt Disney Co. climbed more than 1.4 percent to lead gains in the largest U.S. companies. Citigroup Inc. rallied 2.4 percent as Goldman Sachs Group Inc. added the shares to its “conviction buy” list.
CommScope Inc. surged 30 percent as a private equity firm considers a takeover. Office Depot Inc. gained 3.5 percent after saying earnings will beat estimates.
The S&P 500 advanced 0.2 percent to 1,185.62, adding to three weeks of gains and climbing above its highest close since May 3. The Dow Jones Industrial Average rose 31.49 points, or 0.3 percent, to 11,164.05. The Nasdaq rose 11.46, or 0.5 percent, to 2,490.85.
“Global central banks have set a floor under the market and the risk of a double-dip recession is almost non-existent at this point,” said Oliver Pursche, co-manager of the GMG Defensive Beta Fund and president of Suffern, N.Y.-based Gary Goldberg Financial Services, which manages $500 million. “Traders are not going to fight the Fed after it has come out and said it will support the market, they’re going to buy.”
Earnings-per share have topped analysts’ estimates at more than 86 percent of S&P 500 companies that have posted third-quarter results since Oct. 7, according to data compiled by Bloomberg. U.S. companies are poised to report their fourth straight quarterly earnings increase as speculation that the Fed will inject more money into the economy boosted investor confidence and offset uncertainty about global currency markets.
The Dollar Index, which measures the currency against a basket of six major peers, has slumped 7.3 percent since the end of August while the S&P 500 has rallied 13 percent. The Fed said Wednesday that U.S. economic growth showed little sign of accelerating last month, bolstering speculation that the central bank will act to stimulate growth.
The dollar slid to a 15-year low of 80.41 yen Monday as G-20 finance chiefs meeting in South Korea vowed to avoid weakening currencies to lift exports, damping speculation that governments will buy the U.S. currency to deflate their own.
The G-20 meeting “has reaffirmed the status quo and going forward we are likely to see the Federal Reserve, the Bank of England and the Bank of Japan go on with quantitative easing,” said Kelvin Tay, the chief investment strategist for UBS AG Wealth Management in Singapore. Recent stock gains have “been largely driven by the fact that the U.S. dollar has actually weakened quite substantially against all major currencies since Ben Bernanke’s Jackson Hole speech.” Bernanke said on Aug. 27 in Jackson Hole, Wyo., that he has the tools to prevent another recession.
Information for this article was contributed by Adam Haigh, Inyoung Hwang and Lu Wang of Bloomberg News.
Business, Pages 24 on 10/26/2010