U.S. Stocks Climb on Fed Optimism, Lower Jobless Claims

Story by Bloomberg
Written by Oliver Renick

U.S. stocks rose for a third day as investors speculated interest rates will remain low and data showed fewer Americans filing for jobless claims.

The Standard & Poor’s 500 Index advanced 0.3 percent to 2,006.53 at 9:33 a.m. in New York. The Dow Jones Industrial Average added 36.54 points, or 0.2 percent, to 17,193.39.

“The market’s still in Fed mode,” Joe Bell, a senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said in a phone interview. “A majority of people are thinking July 2015 may be the rate increase and the market’s responding positively to the idea that rates aren’t coming any sooner.”

Jobless claims decreased by 36,000 to 280,000 in the period ended Sept. 13, the Labor Department said today. The median forecast of 52 economists surveyed by Bloomberg called for a decline to 305,000. Those already collecting unemployment benefits fell to a more than seven-year low.

Stocks advanced yesterday, sending the S&P 500 up as much as 0.6 percent, after the Fed renewed its pledge to keep interest rates near zero for a “considerable time” after its bond-buying program ends, probably next month. Policy makers also projected a steeper increase in borrowing costs next year, raising the median forecast for the benchmark rate at the end of 2015 to 1.375 percent from June’s estimate of 1.125 percent.

“There is a tension between the committee’s statement keeping the considerable period language versus the rate forecasts,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “It is quite a balancing act of the high-wire kind that still leaves the market guessing about the Fed’s intentions.”

Alibaba Group Holding Ltd., the Chinese e-commerce giant, intends to pick a price for its nearly $22 billion initial public offering tonight. The company is asking investors to value it as high as $167.6 billion, or 29 times estimated earnings in the year through March. That’s still below Tencent, Baidu Inc. and Amazon.

To contact the reporter on this story: Oliver Renick in New York at orenick2@bloomberg.net