U.S. stocks rose Tuesday, sending the Dow Jones industrial average to its first close above 15,000, on optimism over global central bank stimulus and better-than-estimated corporate earnings.
The Dow Jones industrial average closed up 87.31, or 0.58%, at 15,056.20; the S&P 500 rose 8.46, or 0.52%, closing at 1,625.96; and the Nasdaq composite was up 3.66, or 0.11%, to close at 3,396.63. All numbers are preliminary.
“This is a QE-fueled market,” Steven Bulko, chief investment officer of Lombard Odier Investment Management's $1 billion long/short 1798 Fundamental Strategies Fund, said by telephone, referring to quantitative easing. “You're just not seeing sales based on allocation into any other asset class because of the relative unattractiveness of everything other than equities. That's putting in place a firm bid to the equities market.”
The S&P 500 advanced 0.2% to a record Monday, after the benchmark gauge for U.S. equities topped 1,600 for the first time on May 3. U.S. stocks are in the fifth year of a bull market amid better-than-estimated corporate earnings and three rounds of bond purchases by the Federal Reserve.
Fed Chairman Ben S. Bernanke has injected more than $2.3 trillion into the financial system since 2008. The Fed is currently buying $85 billion of debt each month under its quantitative easing policy. Bank of Japan Governor Haruhiko Kuroda last month began a campaign to end falling prices in a bid to reach 2% inflation in two years. The European Central Bank cut its main refinancing rate last week.
Global equities rose Tuesday as the Reserve Bank of Australia cut its benchmark interest rate to a record low of 2.75%. The Bank of England will probably leave its stimulus program on hold this week amid signs the economy has found a firmer footing. A Bloomberg News survey of economists shows policymakers will refrain from expanding quantitative easing beyond £375 billion ($582 billion) on May 9.
