Benchmarks bolstered gains on the back of Federal Reserve Chairman Ben Bernanke's encouraging comments about the bond buying program. Bernanke said the Federal Reserve is in no rush to taper the stimulus program. The S&P 500 and the Dow Jones registered all-time highs after Bernanke's positive statements. Additionally, the Nasdaq finished at its highest level since 2000. Meanwhile, the number of Americans filing for unemployment benefits increased during the previous week. All ten sectors of the S&P 500 industry groups finished in the green led by technology and materials.
For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) gained 1.1% to close the day at 15,460.92. The S&P 500 added 1.4% to finish yesterday's trading session at 1,675.02. The tech-laden Nasdaq Composite Index rose 1.6% to end at 3,578.3. The fear-gauge CBOE Volatility Index (VIX) declined 1.4% to settle at 14.01. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.5 billion shares, marginally higher than 2013's average of 6.4 billion shares. Advancing stocks outnumbered the decliners. For the 85% that advanced, only 14% declined.
Ben Bernanke allayed investor concerns about winding up the stimulus program sooner-than-expected. In June, Bernanke's comments on slowing the bond purchase program by the end of 2013 and completely ending it by mid-2014 had created panic among investors. Following his discouraging comments, the S&P 500 declined nearly 6%. But recent better-than-expected domestic reports, an encouraging start to the earnings season and Bernanke's positive comments have boosted investor sentiment.
Bernanke said the Federal Reserve is no hurry to wind up the stimulus program and the central bank will continue supporting the economy. He said: "Highly accommodative monetary policy for the ! foreseeable future is what's needed in the U.S. economy." According to the Fed, short-term interest rates will be kept at record lows, at least until employment rate declines to 6.5%. Regarding the tapering of bond purchase program, Bernanke said the Fed is "trying to achieve a substantial improvement in the outlook for the labor market in the context of price stability. We've made progress on that but we still have further to go."
According to the U.S. Department of Labor, initial claims moved up in the previous week. The number of Americans filing for unemployment benefits increased 16,000 to 360,000 from the previous week's revised figure of 344,000. This was well above the consensus estimate of 340,000. The four week moving average increased 6,000 to 351,750 from 345,750. Initial claims numbers follow positive non-farm payroll data released in the previous week. The report stated that the U.S. economy added 195,000 jobs in the month of June. The unemployment rate has also come down to 7.6% from 8.2% a year before.
On the earnings front, Yum! Brands, Inc. (NYSE:YUM) reported second quarter results yesterday. The company's earnings came in above the Street's estimates but revenue fell marginally short of expectations. Shares declined nearly 1.2% after the declaration of results. Excluding items, the company's second earnings per share declined 11 cents to 56 cents from 67 cents in the same period a year ago. Yum's Chairman and CEO David C. Novak said: "KFC sales and profits in China were significantly impacted by intense media surrounding avian flu, as well as the residual effect of the December poultry supply incident. The good news is that China sales are recovering as expected." Banking giants JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) are scheduled to report quarterly results on Friday.
The Technology sector was the biggest gainer among the S&P 500 industry groups and the Technology SPDR (XLK) ! gained 1.! 7%. Stocks such as Google Inc (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), Hewlett-Packard Company (NYSE:HPQ), Intel Corporation (NASDAQ:INTC) and Texas Instruments Incorporated (NASDAQ:TXN) added 1.6%, 2.8%, 1.7%, 3.2% and 1.6%, respectively.
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