July 12, 2013

Stock market gets boost on remarks from Bernanke

Stocks rise after the Federal Reserve chairman says the central bank will keep supporting the economy.

The Associated Press

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 the central bank will keep supporting the economy.

The Dow Jones industrial average rose 169 points, or 1.1 percent, to close at 15,461 Thursday.

The Standard & Poor's 500 index rose 22 points, or 1.4 percent, to 1,675.

Both indexes surpassed the record closes they set in May.

The tech-dominated Nasdaq composite rose 57 points, or 1.6 percent, to 3,578.

Investors also bought bonds after being reassured that the Fed was not in a hurry to pull back on its huge bond-buying program.

The yield on the benchmark 10-year Treasury note fell to 2.57 percent from 2.63 percent late Wednesday. As recently as early May, it was 1.63 percent.

The chairman made the comments in a speech late Wednesday after U.S. markets had closed, saying the economy still needs "a highly accommodative monetary policy for the foreseeable future."

He said the U.S. economy needs help because unemployment is high. The remarks seemed to ease investors' fears that the central bank will pull back on its economic stimulus too quickly.

Stock index futures rose overnight and the market surged at the open Thursday.

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

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