Stocks rise after Bernanke comments
Wall Street extended its February rally Thursday, growing confident that interest rates will hold steady even as Federal Reserve Chairman Ben Bernanke tempered his forecast of slowly cooling growth and inflation with a reminder that price pressures remain a concern.
The Dow Jones industrial average stretched its three-day advance to more than 200 points, the first such jump since August 15-17 last year, and had its second straight record close. The rally, triggered Tuesday by signs of an uptick in mergers and acquisitions, was given new life Thursday by a report that the world’s two largest beermakers, InBev SA and Anheuser-Busch, are considering joining forces.
The bustle of takeover talk coupled with Bernanke’s testimony to Congress have helped send stocks soaring. Bernanke’s comments Thursday were similar to a day earlier, but he added that inflation could once again pick up, which reminded investors that a rate increase isn’t out of the question. That note of caution limited the market’s climb.
The prospect of a rate hike looked pretty dim, however, after most of the economic reports released Thursday. The reports showed a big jump in unemployment claims last week, a huge drop in industrial output in January due to large cutbacks and layoffs in the auto industry, and weaker-than-expected manufacturing in the Philadelphia region.
“The Fed is still data-driven, so we will be looking at the data in the ensuing months,” said Jim Herrick, manager of equity trading at Baird & Co. “There’s a strong possibility we’ll continue this uptrend.”
Also boosting the market were a stock buyback by Caterpillar Inc., an analyst upgrade of chip maker Qualcomm Inc., and Boeing Co. finalizing an order from United Parcel Service Inc. for 27 cargo planes.
The Dow Jones industrial average climbed 23.15, or 0.18 percent, to a record close of 12,765.01, after reaching a new trading high of 12,779.03.
Broader stock indicators were also higher. The Standard & Poor’s 500 index rose 1.51, or 0.10 percent, at 1,456.81, and the technology-laden Nasdaq composite index increased 8.72, or 0.35 percent, at 2,497.10.
Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.71 percent from 4.74 percent late Wednesday.
The Federal Reserve reported Thursday that output at U.S. factories, mines and utilities was down 0.5 percent in January, the largest amount in 17 months, and the Labor Department reported that the four-week moving average of the number of newly laid off workers rose to its highest level in nine weeks.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 1.38 billion shares, compared with Wednesday’s 1.52 billion.
The Russell 2000 index of smaller companies was up 1.44, or 0.18 percent, at 815.43.
Overseas, Japan’s Nikkei stock average rose 0.81 percent, rising for the fifth straight day to its highest level in more than more than six years.
Britain’s FTSE 100 was up 0.19 percent, Germany’s DAX index was down 0.04 percent, and France’s CAC-40 was down 0.09 percent.