Jul 11, 2013 11:59 AM by AP (PHOTO COURTESY: MGN ONLINE)
NEW YORK (AP) - The stock market surged to all-time highs Thursday after Federal Reserve Chairman Ben Bernanke said the central bank would keep supporting the economy for the foreseeable future.
Bernanke said the U.S. economy still needs help because unemployment remains high. His pledge of support boosted stock and bond prices. Gold also rose.
Bernanke made the comments in a speech late Wednesday after U.S. markets had closed.
It was Fed's latest effort to reassure investors that it won't end its stimulus before it is sure the economy is strong enough. The Fed is currently buying $85 billion a month in bonds to keep interest rates low and to encourage spending and hiring.
Bernanke "certainly surprised the markets last night," said JJ Kinahan, Chief Derivatives Strategist for TD Ameritrade. "Many people had the expectation that there might be more pressure to (cut stimulus) soon."
The Standard & Poor's 500 index jumped as high as 1,671 in early trading, above its record close of 1,669 from May 21. The index was up 14 points, or 0.9 percent, at 1,666 as of 11:25 a.m. Eastern Daylight Time.
The index is on track for its sixth straight day of gains, its longest streak in four months.
The Dow Jones industrial average rose 138 points, or 0.9 percent, to 15,430, above its own all-time closing high of 15,409 set May 28.
The Nasdaq composite rose 41 points, or 1.2 percent, to 3,562. The Nasdaq is at its highest since October 2000. It remains well below the all-time high of 5,048 it reached March 10, 2000.
In government bond trading, the yield on the 10-year note fell to 2.59 percent from 2.63 percent Wednesday. The yield has fallen this week. It surged as high as 2.74 percent Friday after the government reported strong hiring in June. Many traders took the report as a signal that the Fed would be more likely to slow its bond purchases sooner rather than later.
The prospect of interest rates staying low for longer gave homebuilders a boost Thursday. The housing market has benefited from low interest rates because they help make mortgages cheaper.
D.R. Horton rose $1.66, or 7.9 percent, to $22.71 and Lennar Group climbed $2.53, or 7.3 percent, to $37.30.
The price of gold rose for a fourth straight day, climbing $35.30, or 2.83 percent, to $1,283 an ounce. Gold has rebounded this week after falling close to a three-year low. Its gains helped mining stocks. Freeport-McMoRan Copper & Gold rose $1.21, or 4.3 percent, to $28.50. Newport Mining gained $1.08, or 4.6 percent, to $27.71.
Stock investors are also focusing on earnings as companies start reporting results for the second quarter, which ended 11 days ago. S&P Capital IQ forecasts that companies in the S&P 500 will report average earnings growth of 3 percent from a year earlier.
Among stocks making big moves:
- Bridgepoint Education rose $3.53, or 28 percent, to $16.25, 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 rose 64 cents, or 1.9 percent, to $35.36, 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 Inc. jumped 84 cents, or 22 percent, to $4.58, after the drug developer said an experimental treatment for kidney patients took a step toward winning approval.
- Celgene rose $8.47, or 6.8 percent, $133.50 after the Swiss drugmaker said its cancer drug Revlimid met its goals in a late-stage study.
14 hours ago