Stocks advanced into record territory Tuesday on investor anticipation the Federal Reserve will not announce any change in policy at the conclusion of its two-day meeting Wednesday.
The Dow Jones industrial average gained 111.42 points to 15,680.35, surpassing the previous high set Sept. 18. The Standard & Poor’s 500 Index finished at a record level for the fifth time in the past six sessions, up 9.84 points to 1,771.95. The Nasdaq composite index rose 12.21 points to 3,952.34, the highest finish in 13 years.
The economic news of the day was mixed with the Conference Board reporting a sharp drop in its consumer confidence index for October. However, retail sales in September were down 0.1 percent due to a 2.2 percent decline in airplane orders. Otherwise, sales were up 0.4 percent on higher spending at bars and restaurants.
Commodities were lower. Oil fell 48 cents to $98.20 a barrel and should decline further after a new report showed inventories rising by 5.9 million barrels in the past week. Gold dropped $6.70 to $1,345.50 an ounce.
Earnings and Fed stimulus have helped extend the S&P 500’s advance to 24 percent in 2013, which would mark its best yearly rally in a decade. Per-share profit has beaten the average analyst estimate at three-quarters of the 284 companies in the index that have reported their latest results, data compiled by Bloomberg show.
The Fed began a two-day meeting Tuesday after consumer confidence fell. An Oct. 22 report revealed that growth in American jobs slowed in September and data Monday showed factory output and home sales missed forecasts.
Xylem (NYSE: XYL), the water company whose pumps helped clean tunnels flooded by Hurricane Sandy in New York, surged 12 percent for the biggest gain in the S&P 500 and largest advance for the stock since it was spun off from ITT Corp. (NYSE: ITT) two years ago. The company posted earnings that beat estimates by 40 percent and raised annual profit and sales forecasts.
Pfizer Inc. (NYSE: PFE), the world’s biggest drugmaker, jumped 1.7 percent after profit beat analysts’ estimates on cost cuts and increased sales of its top vaccine and pain drugs. Masco Corp. (NYSE: MAS) which makes faucets and kitchen and bath cabinets, rose 2.6 percent as its sales topped forecasts.
Apple Inc. (Nasdaq: AAPL), the world’s most valuable company, slipped 2.5 percent after earlier rallying as much as 1.8 percent. The maker of the iPhone said revenue in the current quarter will be $55 billion to $58 billion, compared with the $55.5 billion average of analysts’ estimates compiled by Bloomberg. Gross margins will be 36.5 percent to 37.5 percent, versus the 38 percent projection.
Commerce Department figures showed Tuesday that retail purchases excluding vehicles gained 0.4 percent following a 0.1 percent increase in August and matched the median forecast of economists surveyed by Bloomberg. Total sales dropped 0.1 percent. A report from S&P/Case-Shiller showed house prices climbed at a faster rate in August, jumping 12.8 percent from the previous year.
The Conference Board’s consumer confidence index fell to 71.2 in October from 80.2 the month prior, below the median forecast in a survey of economists for a reading of 75.
Two shares advanced for each that declined in the Stoxx Europe 600 Index. BP (NYSE: BP) jumped 5.6 percent, the most in almost three years.
This year’s rally in equities has pushed valuations on benchmark indexes in the U.S. and Europe to the highest levels in more than three years. The S&P 500 trades for 16.8 times reported earnings, the most since May 2010.
The Stoxx 600 is valued at 20.9 times reported earnings and 14.9 times projected profit, the most expensive valuations since the end of 2009, according to data compiled by Bloomberg. The European gauge has rallied 15 percent this year following a similar gain in 2012.
Coffee futures capped the longest route in more than four decades as wet weather signaled bigger crops than forecast in Brazil, the world’s largest grower. Increasing precipitation in Brazil this week will improve conditions for crops that have been able to flower multiple times amid ample rain, MDA Weather Services in Gaithersburg, Md., said Monday.
Soil moisture will also gain in Colombia, the second-biggest producer, the forecaster said.
Arabica coffee for delivery in December fell 0.6 percent to $1.0695 a pound on ICE Futures U.S. in New York, after touching $1.066, the lowest since March 2009. A decline today would be the 11th straight, the longest slump since at least 1972.
Ten-year Treasury yields were down two basis points at 2.50 percent. Treasury five-year notes were the most expensive in four months relative to two- and 10-year securities before the U.S. sells $35 billion of 2018 debt Tuesday.
The so-called butterfly spread measuring differences between the yields was negative 30 basis points, a level not seen since June 18, based on closing prices. The figure reflects increased demand for the middle security over the outliers.
The Treasury sold $32 billion of two-year securities yesterday with a bid-to-cover auction ratio, which gauges demand by comparing total bids with the amount of securities offered, at 3.32, the highest level since April.
— Bloomberg contributed to this report.