Stocks rise on Bernanke comments

The Dow Jones industrials set new highs Wednesday when stocks extended their gains for a second day after Federal Reserve Chairman Ben Bernanke told a Senate panel the economy should grow modestly this year and that he expects inflation will continue to ease.

The combined gains Tuesday and Wednesday were the Dow’s biggest since Aug. 15-16.

Wall Street, which had faced some concern about whether Bernanke might sound a hawkish note on inflation, welcomed his benign remarks. While investors might debate whether the Fed will lower short-term interest rates later this year, Wall Street appeared more confident the central bank was at least likely to leave rates unchanged, as it has in recent meetings.

Investors pleased by a sense that the overall economy is doing well managed to look past a Commerce Department report that retail sales were essentially flat in January amid slumping automobile sales. It was the weakest showing in three months and below what Wall Street had forecast.

News that DaimlerChrysler AG plans to chop 3,000 Chrysler workers under a plan to restore the U.S. operations’ profitability by next year pleased investors. But Coca-Cola Co.’s earnings disappointed Wall Street.

“I think what we’re having is a victory lap. So far the Fed’s forecasts have been almost spot on,” said Drew Matus, senior economist at Lehman Brothers Inc. “So what this tells us is that the Fed is most likely not in any hurry to move rates in either direction.”

The Dow Jones industrial average rose 87.01, or 0.69 percent, to 12,741.86. The Dow set an intraday high of 12,759.40, eclipsing a high of 12,700.28 set Feb. 7. The blue chip average also finished at a new high, its 28th record close since the start of October. The previous record, set Feb. 1, was 12,673.68.

Wednesday marked the first time since March 17, 1998 the Dow industrials, transportation and utilities averages have closed at simultaneous highs. Such an alignment has occurred only 20 times since 1929. The New York Stock Exchange Composite index closed at a record high 9,427.31.

Other stock indicators also climbed Wednesday. The Standard & Poor’s 500 index rose 11.04, or 0.76 percent, to 1,455.30. The large-cap index is trading at its highest level in more than six years.

The Nasdaq composite index gained 28.50, or 1.16 percent, rising to 2,488.38.

Bonds rose sharply following Bernanke’s testimony, with the yield on the benchmark 10-year Treasury note falling to 4.74 percent from 4.81 percent late Tuesday. The dollar was lower versus most major currencies, except the yen. Gold prices rose.

Light, sweet crude settled down $1.06 at $58 per barrel on the New York Mercantile Exchange after weekly domestic inventory data showed stores of distillates such as home heating oil fell by less than analysts had been expecting. A brush of cold weather across much of the nation had led forecasters to expect a larger decline.

But much of investors’ attention remained on Bernanke’s testimony. He didn’t rule out the possibility of rate hikes, saying interest rates remain “somewhat elevated.” Investors were receptive to his assessment that a precipitous slowdown in the housing sector was showing early signs of easing.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 1.52 billion shares compared with 1.32 billion shares traded Tuesday.

The Russell 2000 index of smaller companies rose 1.46, or 0.18 percent, to 813.99. The Russell also set a new intraday high of 818.19, edging past a high of 817.01 set Friday.

Overseas, Japan’s Nikkei stock average rose 0.74 percent. Britain’s FTSE 100 closed up 0.62 percent, Germany’s DAX index gained 0.95 percent, and France’s CAC-40 increased 0.76 percent.