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July 22, 2014 at 06:57 AM
(Bloomberg) — U.S. stocks rose, with benchmark gauges rebounding from yesterday’s slide, as data showed inflation has failed to gain a toehold and investors assessed earnings from Travelers Cos. to Comcast Corp.
Chipotle Mexican Grill Inc. jumped 12 percent after reporting earnings and sales that beat projections. Comcast added 1.8 percent after profit topped estimates on higher revenue from Internet customers. McDonald’s Corp. fell 2.4 percent after profit fell short of analysts’ estimates. Travelers dropped 4.3 percent as earnings slid 26 percent.
The S&P 500 rose 0.5 percent to 1,982.82 at 10:02 a.m. in New York. The Dow Jones Industrial Average increased 55.06 points, or 0.3 percent, to 17,106.79. Trading in S&P 500 stocks was 7.1 percent above the 30-day average at this time of day.
“The equity market seems destined to trend higher,” Terry Sandven, chief equity strategist at Minneapolis-based U.S. Bank Wealth Management, which oversees $120 billion, said by phone. “We think there is still some modest upside if you continue to see earnings rise. The inflation numbers are supportive of higher stock prices. It reflects U.S. economic growth that is neither too slow nor too fast.”
The S&P 500 advanced almost 6.8 percent this year through yesterday amid better-than-estimated corporate earnings and central bank stimulus, as the U.S. economy shows signs of recovering from a 2.9 percent contraction in the first quarter.
Data today showed the consumer price index increased 0.3 percent in June, paced by a jump in gasoline that is now reversing, bolstering Federal Reserve Chair Janet Yellen’s view that recent increases were temporary.
Inflation Data
Investors have been scrutinizing inflation data to determine when the Fed will begin raising its benchmark interest rate. Last week Yellen told lawmakers the central bank plans to press on with record easing to combat persistent weakness in the job market.
Inflation has failed to get a toehold as slowing global demand has prevented companies from exercising pricing power. If prices remain in check, Fed policy makers can keep interest rates low well into 2015.
A separate report showed sales of previously owned U.S. homes climbed in June to an eight-month high, a sign the housing market is making more headway. The S&P 500 fell 0.2 percent yesterday on concern that the crisis in Ukraine could lead to deeper sanctions against Russia. European Union governments labored to identify more Russian businesspeople and companies to sanction and pressed President Vladimir Putin to speed a probe into the downing of Malaysian Air flight MH17 or face isolation.
Day-By-Day
“It’s a day-by-day encounter for markets, with every speech and communication from politicians giving us the direction for the day,” Lorne Baring, who helps oversee about $500 million as managing director at B Capital SA in Geneva, said by telephone, referring to Russia.
