Stocks Rise To Record Highs As Fed Keeps Stimulus
By STEVE ROTHWELL
NEW YORK (AP) â¿¿ Call it the Bernanke Boost.
The stock market, which has been marching higher for a week, got extra fuel Thursday after Federal Reserve Chairman Ben Bernanke said the central bank will keep supporting the economy.
The Dow Jones industrial average and Standard & Poor's 500 surged to all-time highs. And the yield on the 10-year Treasury note continued to decline as investors bought bonds. Stocks that benefit most from a continuation of low interest rates, such as homebuilders, notched some of the biggest gains.The chairman made the comments in a speech late Wednesday after U.S. markets had closed, saying the economy needs the Fed's easy-money policy "for the foreseeable future." The U.S. economy needs help because unemployment is high, Bernanke said. His remarks seemed to ease investors' fears that the central bank will pull back on its economic stimulus too quickly. The Fed is currently buying $85 billion a month in bonds to keep interest rates low and to encourage spending and hiring. Stock index futures rose overnight. Stocks surged when the market opened Thursday and stayed high for the rest of the day. "The Fed has made it unequivocally clear that they are not in any hurry to do anything," said Alec Young, Global Equity Strategist at S&P Capital IQ. "It's very bullish for stocks." The S&P 500 index jumped 22.40 points, or 1.4 percent, to 1,675.02, surpassing its previous record close of 1,669 from May 21. The index rose for a sixth straight day, its longest streak in four months. The Dow rose 169.26 points, or 1.1 percent, to 15,460.92, above its own all-time closing high of 15,409 set May 28. The Nasdaq composite rose 57.55 points, or 1.4 percent, to 3,578.30, its highest level in nearly 13 years. In government bond trading, the yield on the 10-year Treasury note fell to 2.57 percent from 2.63 percent Wednesday. The yield was as high as 2.74 percent Friday after the government reported strong hiring in June. Many traders took that report as a signal that the Fed would be more likely to slow its bond purchases sooner rather than later.
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