Stocks up to record high after Fed chief Bernanke’s guidance
19 Jul 2013
The Dow and S&P 500 rose to record territory once again yesterday, on a batch of strong results and a fall in jobless claims.
The Dow Jones industrial average was up 78 points, or 0.5 per cent, ending at a record closing high of 15,548.54. The S&P 500 also increased 0.6 per cent with both finishing at record closing highs. Both indexes were earlier up to fresh all-time trading highs.
Against the Dow and S&P 500 though, the Nasdaq lagged, gaining only a handful of points for the day, however, the tech-heavy index was burdened by poor performers like eBay and Intel.
The marginal uptick, however, was enough to see the Nasdaq close at its highest level since September 2000.
All three indexes, though, were up sharply up for the year.
The Dow and S&P 500 rose nearly 19 per cent even as the Nasdaq rallied almost 20 per cent.
The four-week moving average, which evens out much of the volatility in the weekly reading, also fell slightly, in the past few months seeing levels not seen since 2008.
Investors also took encouragement from a separate report pointing to a pick up in manufacturing activity in the Mid-Atlantic region at a faster pace than projections by analysts.
Fed chairman Ben Bernanke testified before Congress for a second day yesterday reiterating that the Fed would only start winding down its stimulus once it was sure the economy was strong enough to stand on its own.
Bernanke's reassurances made investors rush to equities, pushing major indexes to all-time closing highs giving the S&P 500 its tenth positive session out of the past 11. The euro, meanwhile slipped and the dollar was up against a basket of currencies.
According to analysts, Bernanke had made equities the only place for most people to go, and the rally had been entirely on him.
After market closure, Moody's changed its outlook on the US' "AAA" sovereign rating to stable from negative, indicating that government debt, in its view, was on track with the rating agency's criteria, according to analysts.
European equities closed 0.9 per cent higher, outperforming US markets, even as the broad STOXX Europe 600 broke above a resistance level.
Meanwhile, market players are looking to a meeting of Group of 20 finance ministers for signs of any coordinated approach to the end of US money-printing, which could help defuse volatility in global markets.
The G20 meeting, in Moscow today and tomorrow, has participation from several economies that have borne the brunt of the dollar's surge since Bernanke, in May, first announced a roll back to the Fed's bond-buying programme.
