Make us your home page
Instagram

Stocks surge after Bernanke eases fear of stimulus drawback

The Federal Reserve will continue supporting the U.S. economy and that put smiles on the faces of investors on Wall Street on Thursday in New York.

Getty Images

The Federal Reserve will continue supporting the U.S. economy and that put smiles on the faces of investors on Wall Street on Thursday in New York.

NEW YORK — 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 late Wednesday that the central bank will keep supporting the economy "for the foreseeable future."

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 home builders, notched some of the biggest gains.

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 buying $85 billion a month in bonds to keep interest rates low and to encourage spending and hiring.

"It's back to the old accommodative Fed, so the markets are happy again," said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research.

The market pulled back last month after Bernanke laid out a timetable for the Fed to wind down its bond-buying program. He said the central bank would likely ease back on its monthly purchases if the economy strengthened sufficiently.

On Thursday, 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, set 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 57.54 points, or 1.4 percent, to 3,578.30.

In government bond trading, the yield on the 10-year 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.

The Fed has also said it plans to keep short-term rates at record lows, at least until unemployment falls to 6.5 percent.

Home builders, which are sensitive to the outlook for interest rates, were big gainers.

D.R. Horton rose $1.93, or 9.2 percent, to $22.98, and Lennar Group climbed $2.88, or 8.3 percent, to $37.44.

The housing market has benefited from low interest rates because they help make mortgages cheaper.

"The Bernanke qualifications have taken the interest rate risk off the table, and now it's really about what will earnings say," said Jonathan Lewis, chief investment officer at Samson Capital Advisors.

The price of gold gained for a fourth straight day, climbing $32.70, or 2.6 percent, to $1,280.10 an ounce. Gold has rebounded this week after falling close to a three-year low.

Stocks surge after Bernanke eases fear of stimulus drawback 07/11/13 [Last modified: Thursday, July 11, 2013 9:54pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Carrollwood fitness center employs scientific protocol to help clients

    Business

    In 2005, Al Roach and Virginia Phillips, husband and wife, opened 20 Minutes to Fitness in Lakewood Ranch, and last month they opened the doors to their new location in Carrollwood.

    Preston Fisher, a personal fitness coach at 20 Minutes To Fitness, stands with an iPad while general manager/owner Angela Begin conducts an equipment demonstration. The iPad is used to track each client's information and progress. I also included one shot of just the equipment. The center recently opened in Carrollwood. Photo by Danielle Hauser.
  2. Olive Tree branches out to Wesley Chapel

    Business

    WESLEY CHAPEL — When it came time to open a second location of The Olive Tree, owners John and Donna Woelfel, decided that Wesley Chapel was the perfect place.

    The Olive Tree expands its offerings of "ultra premium?€ extra virgin olive oils (EVOO) to a second location in Wesley Chapel. Photo by Danielle Hauser.
  3. Massachusetts firm buys Tampa's Element apartment tower

    Real Estate

    TAMPA — Downtown Tampa's Element apartment tower sold this week to a Massachusetts-based real estate investment company that plans to upgrade the skyscraper's amenities and operate it long-term as a rental community.

    The Element apartment high-rise at 808 N Franklin St. in downtown Tampa has been sold to a Northland Investment Corp., a Massachusetts-based real estate investment company. JIM DAMASKE  |  Times
  4. New York town approves Legoland proposal

    News

    GOSHEN, N.Y. — New York is one step closer to a Lego dreamland. Goshen, a small town about fifty miles northwest of the Big Apple, has approved the site plan for a $500 million Legoland amusement park.

    A small New York town, Goshen approved the site plan for a $500 million Legoland amusement park. Legoland Florida is in Winter Haven. [Times file  photo]
  5. Jordan Park to get $20 million makeover and new senior housing

    Real Estate

    By WAVENEY ANN MOORE

    Times Staff Writer

    ST. PETERSBURG —The St. Petersburg Housing Authority, which bought back the troubled Jordan Park public housing complex this year, plans to spend about $20 million to improve the 237-unit property and construct a new three-story building for …

    Jordan Park, the historic public housing complex, is back in the hands of the St. Petersburg Housing Authority. The agency is working to improve the 237-unit complex. But the latest plan to build a new three-story building for seniors will mean 31 families have to find new homes. [LARA CERRI   |   Tampa Bay Times]