S&P 500 Cheapest to Bonds on Zero Fed Rates

The Standard & Poor's 500 Index is approaching the cheapest level ever compared with bonds as Federal Reserve Chairman Ben S. Bernanke's zero-percent interest rates drive investors and companies from cash. The U.S. government and the Fed lent, spent or guaranteed as much as $12.8 trillion to end the worst recession since the 1930s. That and Bernanke's three-year effort to drive down interest rates are paying off with rising consumer confidence and expanding factory output. The S&P 500 is off to its best annual start since 1997 as riskier assets lure money from savings accounts offering some of the lowest yields on record. "The real target for the low rates is indeed businesses," John Canally, who helps oversee about $330 billion as an economist and investment strategist at LPL Financial Corp. in Boston, said in a Feb. 14 phone interview. "They want to push money out on the risk spectrum. They want that to be put to use buying a new piece of equipment or expanding a plant or adding a third assembly line."

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