Fed chief Bernanke talks up benchmark indices
12 Jul 2013
Benchmark stock indexes were up at record highs yesterday, a day after Federal Reserve chief Ben Bernanke promised to keep "easy money" policies in place as long as needed.
The Dow Jones industrial average surged over 160 points to 15,456, over taking its all-time closing high of 15,409.39 set on 28 May. By midday, the blue-chip index partly shed gains and rose 129 points, or 0.9 per cent, to 15,421 - still a record high.
The Standard & Poor's 500 index was up 16 points to 1,669, a 1.3 per cent jump that saw it close at an all time high of 1,669.16 set on 21 May. The index has risen almost 147 per cent since the bull market began, making it the fifth-best bull market of all time, according to S&P Dow Jones Indices.
The small-cap Russell 2000 index increased 0.8 per cent to 1,029, setting record highs for the third straight day, while the Nasdaq composite index rose 45 points to 3,566, keeping the tech-heavy index at 12-year highs.
Bernanke said the economy still needed "highly accommodative monetary policy ... for the foreseeable future," reassuring worried investors the central bank would reduce its $85 billion monthly purchases of asset-backed securities and government bonds.
US government debt prices rose on Bernanke's comments, which reassured the market the US central bank would keep short-term interest rates near zero for an extended period.
According to traders, the remarks from the Fed chief helped the Treasury's $13 billion 30-year bond auction, reducing uneasiness about taking on that much duration amid uncertainty regarding the near- and medium-term course of monetary policy.
Another factor behind the US jobless claims in the latest week was the bid for Treasuries.
Copper and gold prices also gained on the prospect of continuing stimulus from the Fed as also other central banks supporting the global economy. Copper prices were up at their highest level in nearly a month.
According to Bernanke, the overall message from the central bank was that a highly accommodative policy was needed for the foreseeable future.
Bernanke's message served to change investor sentiment, even though minutes from the Fed's June meeting showed that half of its policymakers favoured the winding down of the $85 billion-a-month stimulus programme by the end of the year.
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