S&P 500 Tops 1400

by on August 7, 2012 4:47 pm BST

NEW YORK—The Standard & Poor’s 500-stock index topped 1400 for the first time in three months, led by gains in energy shares, as investors bet on additional stimulus from central banks.

The Dow Jones Industrial Average tacked on 88 points, or 0.7%, to 13205 in midday trading, extending gains into a third consecutive day.

The S&P 500 rose 12 points, or 0.9%, to 1406, topping the psychologically significant 1400 level for the first time since early May. Every company in the index’s energy group rose, led by Chesapeake, the country’s second-largest natural gas producer, which jumped on higher-than-expected revenue and asset-sale plans.

More hints of potential Fed action? Paul Vigna on The News Hub previews the day in financial markets, including a call by a Federal Reserve president to launch a bond-buying program and a bounce in crude-oil futures. Photo: Getty Images.

The Nasdaq Composite Index advanced 34 points, or 1.1%, to 3024.

“Stocks appear to be drifting higher on anticipation of some action of the European Central Bank,” said Jack Ablin, chief investment officer at the Harris Private Bank, which manages $60 billion in assets.

ECB President Mario Draghi said last week that the central bank could focus on purchasing short-term debt in efforts to address the region’s woes, which has eased some investors’ concerns about the region’s woes in recent days.

Meanwhile, Federal Reserve Bank of Boston President Eric Rosengren said Monday the Fed should launch an aggressive open-ended bond buying program to boost the economy until unemployment begins falling again. Mr. Rosengren is a non-voting member of the Fed’s policy-setting committee.

“It’s a win-win situation. The Fed’s going to back us if we don’t do well enough, and otherwise we’ll have good growth,” said Diane Jaffee, senior portfolio manager at TCW Group.

Fossil surged, leading the S&P 500, as the fashion-accessories retailer reported an unexpected increase in second-quarter profit.

CVS Caremark

fell as the drug store chain and pharmacy-benefits manager raised its full-year profit forecast but quarterly revenue fell short of expectations.

On the economic front, the Labor Department reported the number of job openings at the end of June ticked up from a month earlier to 3.8 million, while the hiring rate was essentially unchanged.

A report on consumer credit in June due at 3 p.m. ET is expected to show an increase of $10 billion, less than the $17.1 billion increase in May.

European markets edged mostly higher, with the Stoxx Europe 600 up 0.8%, as investors shook off weak data and a plunge in U.K. lender Standard Chartered

. London-listed shares of the firm plunged after the New York State Department of Financial Services alleged that a unit at the bank handled at least $250 billion in illegal transactions with Iranian entities. The bank said it “strongly rejects” the allegations.

In Germany’s manufacturing sector, incoming orders fell more than expected in June. U.K. industrial production slumped 2.5% in June after rising 1% in May.

Asian markets were broadly higher, with Japan’s Nikkei Stock Average advancing 0.9%, after the Bank of Japan extended measures encouraging companies to buy foreign assets in order to curb yen strength.

Crude-oil futures added 1.4% to $93.50 a barrel, while gold futures eased less than 0.1% to $1,615.50 an ounce. The U.S. dollar fell against the euro but gained ground against the yen.

In corporate news, shares of Johnson & Johnson

and Pfizer

fell after the drug makers said they were discontinuing development of an Alzheimer’s treatment because of recent disappointing results in a late-stage trial.

The U.S.-listed shares of Ireland’s Elan,

a partner of J&J and Pfizer, slumped.

Hospital operator Tenet Healthcare

climbed after its bottom line topped analysts’ expectations.

Knight Capital

rose, trimming Monday’s 24% loss, which had followed the struggling trading firm announcing a pricey rescue plan to cover $440 million in trading losses tied to a software error.

Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com