Optimism over economic growth lifts Wall Street

Dow Jones:12,288.17 (+61.53) S&P 500:1,336.32 (+8.31) Nasdaq:2,825.56 (+21.21)

US STOCKS gained, pushing the Standard and Poor’s 500 Index to a 32-month high yesterday, as improving earnings, takeovers and a higher forecast for economic growth from the Federal Reserve bolstered confidence in equities.

“The more optimistic view of the Federal Reserve is confirmed in part by the financial performance of major US corporations,” said Richard Skaggs, senior equity strategist at Loomis Sayles in Boston, which manages $152 billion. “Frankly we’re encouraged to see the Fed take note of the improvement that is seen in some quarters.”

The Dow Jones industrial average gained 61.53 points, or 0.50 per cent, to 12,288.17.

The Standard & Poor’s 500 Index rose 8.31 points, or 0.63 per cent, to 1,336.32.

The Nasdaq Composite Index added 21.21 points, or 0.76 per cent, to 2,825.56.

Investors last week put the most money into US-stock mutual funds in almost two years as equities extended their recovery from the worst bear market since the Great Depression.

Stocks extended gains after minutes from the Fed’s last policy meeting showed officials “continued to express disappointment in both the pace and the unevenness of the improvements in labor markets”, while also judging the recovery to be on a “firmer footing”.

Dell rose 12 per cent to $15.56. The world’s third-largest personal- computer maker reported fourth-quarter profit excluding some costs of 53 cents a share, exceeding by 44 per cent the average of estimates from analysts surveyed by Bloomberg.

Deere gained 2.4 per cent to $95.86. The world’s largest farm-equipment maker forecast 2011 net income of $2.5 billion in the year ending October 31st, a 19 per cent increase from the company’s previous estimate in November.

Genzyme rose 1.1 per cent to $75.10.

KB Home advanced 2.1 per cent to $14.64.

Lennar climbed 1.9 per cent to $20.85.

Family Dollar Stores soared 21 per cent, its biggest gain since at least 1980, to $53.25. Nelson Peltz’s Trian Group offered to acquire the second biggest dollar-store chain in the US for $55 to $60 a share, according to a regulatory filing. – (Bloomberg)