Bank of America: Cost-Cutting Winner (Update 1)

Updated from 2:49 p.m. ET with market close information.

NEW YORK ( TheStreet) -- Bank of America ( BAC) was the winner among the nation's largest financial players on Wednesday, with shares rising 3% to close at $14.31.

The broad indices ended higher after Federal Reserve chairman Ben Bernanke said during testimony before the House Financial Services Committee that "a highly accommodative monetary policy will remain appropriate for the foreseeable future."

The Federal Open Market Committee's "highly accommodative" monetary stimulus efforts include keeping the short-term federal funds rate in a range of zero to 0.25% since late 2008, and monthly purchases of $85 billion in long-term bonds by the Fed since September.

Bernanke opened his remarks by mincing no words for members of Congress: "The economic recovery has continued at a moderate pace in recent quarters despite the strong headwinds created by federal fiscal policy."

The market has anticipated a reduction of securities purchases by the central bank, sending the yield on 10-year U.S. Treasury bonds to 2.49% Wednesday afternoon, rising from just 1.70% at the end of April. The recent closing high for the 10-year was 2.73% on July 5.

When discussing the Fed's bond-buying, Bernanke said "because our asset purchases depend on economic and financial developments, they are by no means on a preset course. On the one hand, if economic conditions were to improve faster than expected, and inflation appeared to be rising decisively back toward our objective, the pace of asset purchases could be reduced somewhat more quickly. On the other hand, if the outlook for employment were to become relatively less favorable, if inflation did not appear to be moving back toward 2 percent, or if financial conditions -- which have tightened recently -- were judged to be insufficiently accommodative to allow us to attain our mandated objectives, the current pace of purchases could be maintained for longer."

The KBW Bank Index ( I:BKX) was up 1% to 64.74, with all but seven of the 24 index components showing afternoon gains.

Shares of Bank of New York Mellon ( BK) were up 2% to close at $30.92, after a strong earnings report that included a 14% year-over-year increase in fee revenue. On a sequential basis, the custody bank's fee revenue was up 13%. Bank of New York Mellon also reported a very strong second-quarter return on tangible common equity of 25.2%.

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