U.S. stocks close higher on tech rally
SAN FRANCISCO (MarketWatch) -- U.S. stocks gained for a second day Wednesday, turbocharged by a rally in tech stocks and Federal Reserve Chairman Ben Bernanke's comments, and undeterred by a slightly weaker Beige Book.
The Dow Jones Industrial Average (DJIA) closed up 103.16 points, or 0.8%, to 12,908.70. The index touched an intraday high of 12,921.94 earlier in the session.
Rounding out the top five percent gainers on the Dow, all with gains of 2% or more, were
Stocks across the board received a boost after Bernanke reiterated remarks to Congress that the central bank was ready, though in no rush, to inject more stimulus into the U.S. economy. He added that he doesn't expect the economy to slip back into recession. Read more on Bernanke.
On the other hand,
Because investor sentiment has been negative lately, even tepid news showing growth is enough to move sidelined investors into taking risks, said Stuart Freeman, chief equity strategist at Wells Fargo Advisors.
For example, while U.S. housing data out earlier Wednesday appeared mixed, investors focused on a surge in June housing starts over a drop in building permits as a sign that the home-building market has bottomed. Read more on housing data.
Even the addition of two more Fed regions showing slowed growth in the Beige Book did little to dent stock gains. Read more on Beige Book.
"Gains are very highly concentrated in cyclicals versus defensive stocks," said Freeman. "We'll probably see more days of this."
Freeman has an end-of-year target for the S&P 500 index (SPX) of 1,400 to 1,450.
The S&P 500 gained 9.11 points, or 0.7%, to close at 1,372.78, led by a 1.9% rally in tech shares. The index earlier touched an intraday high of 1,375.26. Financials and consumer staples were the only two of 10 sectors lower.
The tech-heavy Nasdaq Composite (COMP) also rose, rallying 32.56 points, or 1.1%, to close at 2,942.60, standing near its intraday high of 2,951.30.
Fed 'reviewing options'
"Markets are seeing some follow-through from yesterday's turnaround advance," said Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Conn.
"The catalyst for that turnaround seemed to be that while economic data have clearly slowed, some investors are looking ahead to further Fed stimulus. ... Bernanke was fairly vague but did point out that the Fed was reviewing a number of options that could be deployed," he said.
U.S. stocks ended higher Tuesday, propelled by quarterly reports from
Also helping, said Sheldon, were corporate results that were beating recently lowered views.
"Now that earnings are coming through, enough companies are beating estimates that investors are willing to go back into the market for now," Sheldon said. But he cautioned, "There's still plenty of uncertainty."
Both on the NYSE and Nasdaq advancing stocks outnumbered decliners by about three to two. Volume of NYSE-listed shares was about 3.5 billion shares, while Nasdaq-listed share volume was about 1.7 billion.