Closing Bell: Bernanke Allays Fears, S&P 500 Has Record Close

new york stock exchange traders investors wall street ben bernanke federal reserve stimulus
Richard Drew/AP
Ben Bernanke appears to have put investor fears to rest -- for the time being, anyway. Stocks surged Thursday following the Federal Reserve chairman's comments late Wednesday that the economy still needs "a highly accommodative monetary policy for the foreseeable future," with investors pushing the Standard & Poor's 500 index to an all-time closing high.

Investors took Bernanke's speech as an assurance that the Fed isn't about to begin pulling back from its bond-buying program, which has helped to drive stocks much higher this year.

The Dow Jones industrial average (^DJI) jumped 169 points, or 1.1 percent to close at 15,461, while the S&P 500 (^GPSC) advanced 22 points, or 1.4 percent, to 1,675, besting its previous all-time closing record of 1,669 on May 21. The Nasdaq (^IXIC) climbed 58, or 1.6 percent, to 3,578.

The Fed is currently buying $85 billion a month in bonds to keep interest rates low and to encourage spending and hiring. After Bernanke's remarks, stocks that are helped by low interest rates, such as home builders, perked up.

Homebuilders D.R. Horton (DHI) rose $1.93, or 9.2 percent, to $22.98, Lennar (LEN) climbed $2.88, or 8.3 percent, to $37.44, and PulteGroup (PHM) advanced $1.37, or 7.2 percent, to $20.39.

Fears of a Fed pullback and a recovering housing market have prompted mortgage rates to climb in recent weeks -- and this week was no exception. Freddie Mac said the average rate on a 30-year mortgage rose to 4.51 percent from 4.29 percent the previous week. The average on the 15-year fixed mortgage increased to 3.53 percent from 3.39 percent last week. That's the highest since August 2011.

Mortgage rates may be rising, but the nation's deficit is falling. The federal government reported a rare surplus of $116.5 billion in June, the largest for a single month in five years. The gain kept the nation on track for its lowest annual deficit in half a decade. Treasury said the surplus was due in part to $66.3 billion in dividend payments by Fannie Mae and Freddie Mac for the taxpayer support they received in 2008 at the height of the financial crisis.

Stocks in the news Thursday:
  • Shares of PriceSmart (PSMT) fell after the warehouse club operator reported its fiscal third quarter net income below Wall Street expectations. Shares fell $1.16, or 1.3 percent, to $90.47, after earlier falling as low as $85.36.
  • Bridgepoint Education (BPI) rose $3.31, or 26 percent, to $15.92, after the for-profit education company said its Ashford University had won accreditation. Bridgepoint, which also operates the University of the Rockies, struggled with accreditation problems for much of 2012.
  • Microsoft (MSFT) rose 98 cents, or 2.8 percent, to $35.68, after the company announced a major reorganization. The world's largest software maker has been struggling with a steady decline in PC demand as people turn to tablets and other mobile devices.
  • Rockwell Medical Technologies (RMTI) jumped 59 cents, or 15.7 percent, to $4.35, after the drug developer said an experimental treatment for kidney patients took a step toward winning approval.
  • Celgene (CELG) rose $9.84, or 7.9 percent, $134.92 after the Swiss drugmaker said its cancer drug, Revlimid, met its goals in a late-stage study.
  • The Federal Trade Commission has signed off on Hertz's $2.3 billion acquisition of rival rental-car company Dollar Thrifty Automotive Group. As part of that deal, Hertz sold off its former Advantage car rental business, select airport operations and some other assets. Shares of Hertz Global Holdings (HTZ) rose 3.2 percent to $27.07.
What to watch Friday:
  • JPMorgan Chase (JPM) and Wells Fargo (WFC) report quarterly earnings before U.S. stock markets open.
  • The Labor Department releases data on producer prices for June at 8:30 a.m. Eastern Time.
  • At 9:55 a.m., the University of Michigan issues its first reading of consumer sentiment for July.
-Compiled from staff and wire reports.

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19 Comments

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nj666

The rich are getting richer. What would the left be saying if Bush was in office

July 12 2013 at 6:31 AM Report abuse +1 rate up rate down Reply
thefacts22

It reminds me of what happened in Europe,and the crony capitalists,sooner or later our home grown Progressives will have to face a dismal balance sheet,and reality will set in....Bankrupcies and fraud all over....Be very careful with your invesments

July 12 2013 at 3:50 AM Report abuse rate up rate down Reply
1 reply to thefacts22's comment
bdyftns

ya, my investments having only gone skyward since 2009. For some reason people hate to see good news.

July 12 2013 at 4:39 AM Report abuse +1 rate up rate down Reply
Harry Diamanti

thank you for my robust portfolio - cry babies go home please

July 12 2013 at 12:03 AM Report abuse rate up rate down Reply
2 replies to Harry Diamanti's comment
h.hughjardon

Congrats dude...what's it worth?

July 12 2013 at 12:08 AM Report abuse -2 rate up rate down Reply
Craig

I guess you haven't heard the saying, "the guy who dies with the most toys is still dead." Hope you can take it with you.

July 12 2013 at 8:29 AM Report abuse -1 rate up rate down Reply
hamcallk5co

This market is "Bernanke's Bubble" and just another big flop caused by government that cannot keep there god-awful hands to themselves.

July 11 2013 at 9:10 PM Report abuse +1 rate up rate down Reply
email17070

whopdee doo!

July 11 2013 at 8:43 PM Report abuse +2 rate up rate down Reply
hap0749

I feel this is honest good earnings. the debt is down. fanny mae and freddy are paying off for the government. i do not think many expected this. i did not. i was wrong. Bush was right. ok?

July 11 2013 at 8:12 PM Report abuse -1 rate up rate down Reply
eastorbuny

Another bubble is quickly inflating, and what's left of The Middle Class is about to get screwed again.

July 11 2013 at 7:41 PM Report abuse +2 rate up rate down Reply
TINKDAY

Just keep in mind the government is creating massive amounts of debt by still bailing out the banks and wall street with this monthly buybacks, they will try and fix this by raising taxes, which they have done and cutting money to states, which they have done, leaving states to raise taxes, fees, and tolls and adding new ones. And lets not forget blaming SS and trying to cut the hell out of it, even though the problem with SS is government raiding the fund since 1976 and also another big one transferring the high cost of health to the individual. With all this, maybe this is why the real numbers on the economy are so weak.

July 11 2013 at 7:33 PM Report abuse +3 rate up rate down Reply
1 reply to TINKDAY's comment
h.hughjardon

LBJ was POTUS in 1976?

Google 'quantitative easing' and get back to us.

July 11 2013 at 10:13 PM Report abuse -3 rate up rate down Reply
ozamiz85

And it will be down Next Week... Fools on Wall Street

July 11 2013 at 6:50 PM Report abuse -1 rate up rate down Reply
fineblackgent1

Thank you president Obama for this robust economy and record Dow!!

July 11 2013 at 6:28 PM Report abuse -2 rate up rate down Reply
2 replies to fineblackgent1's comment
jerrym930

Robust economy? Are you serious? The DOW, along with the other markets are being lifted by the FED, not the President. Company stocks rise and fall based on their profitability. Right now they are showing profits because they cut costs long ago, which was mainly driven by massive layoffs. Job growth is still below the population increase, which means we will continue seeing more and more people on government social welfare programs, instead of having jobs.

We will see our nation's debt sky-rocket until we finally run off all those who would buy our bonds and loan us money. Our credit rating will fall first of course, and then the government will double down on the printing of money. All of this will hit the poor and lower middle class like a sledge hammer. You are blind to reality if you can't see what is coming.

July 11 2013 at 7:24 PM Report abuse -1 rate up rate down Reply
1 reply to jerrym930's comment
pinky

me thinks your just a pessimist.

July 11 2013 at 7:33 PM Report abuse +1 rate up rate down
jcchase335

Unfortunately this will create another bubble ready to pop. When that pops, its gonna hurt worse than the previous collapse in 2008. I used to love Obama, now I see that he is in over his head...

July 11 2013 at 8:19 PM Report abuse rate up rate down Reply