John Maynard Keynes once said that playing the stock market was "analogous to entering a newspaper beauty-judging contest in which one must select the six prettiest faces out of a hundred photographs, with the prize going to the person whose selections most nearly conform to those of the group as a whole." Along the same line of thinking, a portfolio manager trying to keep up with current market trends should pay heed to the stock market moving higher Wednesday despite hawkish testimony from Federal Reserve Chairman Alan Greenspan and disappointing outlooks from Intel ( INTC) and Yahoo! ( YHOO). Fueled largely by strong biotech earnings, the Nasdaq Composite
closed at a four-year high and in positive territory for 2005, while the S&P 500 again closed at a four-year high. The Dow Jones gained 42.59 points, or 0.4% to 10,689.15, its highest close since March, after earlier touching a low of 10,581. The S&P 500 rose 5.85 points, or 0.5%, to 1235.20, while the Nasdaq gained 15.39 points, or 0.7%, to 2188.57. The gains came even as Greenspan signaled that the Fed is going to continue raising rates -- seemingly past current expectations. In what will likely be his last testimony to Congress, Greenspan repeated his mantra that even if inflation pressures remain contained at the moment, the economy remains strong enough for the Fed to continue removing its accommodative monetary stance. Bond pits first reacted to Greenspan's comments by sending the 10-year Treasury bond sharply lower in price and its yield up to as high as 4.23%. But the benchmark note bounced back and ended up 5/32 on the day with its yield down to 4.16%. Equities players, busy sifting through the second-quarter earnings season, largely ignored Greenspan's comments. Early pressure on major averages was mostly due to an earnings miss from GM ( GM) and the disappointing outlooks at Intel and Yahoo!, which fell 4.4% and 11.5% respectively.