IBJNews

Stocks edge up as Bernanke reassures on stimulus

Back to TopCommentsE-mailPrintBookmark and Share

Stocks edged higher Wednesday in early trading on Wall Street after several major companies reported earnings gains and Federal Reserve Chairman Ben Bernanke said the central bank had no firm timetable for cutting back on its bond purchases.

Bernanke said that the bank would consider reducing its stimulus program if the economy improves, but emphasized that the reductions were "by no means on a preset course," according to a prepared text of Bernanke's testimony before Congress, which began Wednesday morning.

The central bank is currently buying $85 billion of bonds a month to keep interest rates low and encourage borrowing. Concerns that the Fed was poised to start easing back on that stimulus before the economy had recovered sufficiently caused the stock market to pull back in June.

"The market is responding well," to Bernanke's comments, said Phil Orlando, chief market strategist at Federated Investors. The concern has been that "the Fed was going to dial the (stimulus) down to zero regardless how the economy was doing."

The Dow Jones industrial average rose 21 points, or 0.1 percent, to 15,472, in late-morning trading. The Standard & Poor's 500 index climbed four points, or 0.2 percent, to 1,680. The NASDAQ composite gained eight points, or 0.3 percent, to 3,607.

Bernanke's comments also had an impact on the Treasury market.

The yield on the 10-year Treasury note fell after Bernanke's comments as investors bought U.S. government bonds. The yield fell to 2.48 percent from 2.53 percent on Tuesday. The yield has been gradually declining since July 5, when it surged to 2.74 percent after the government reported that hiring was strong in June.

If Treasury yields rise too fast, it worries concern stock investors because of the impact that rising interest rates have on the wider economy. Higher mortgage rates, for example, would slow demand for homes.

The stock market has climbed back to record levels following a brief slump in June, when the S&P 500 logged its first monthly decline since October on concern that the Federal Reserve would ease back on its economic stimulus too quickly. The S&P 500 has gained 4.7 percent in July and the Dow is 3.8 percent higher.

Investors are also keeping an eye on company earnings during one of the busiest weeks for second-quarter profit reports.

Bank of New York Mellon gained 85 cents, or 2.9 percent, to $31.23, after the bank posted earnings that beat analysts' expectations. The lender said its net income surged in the second quarter as market conditions improved and it collected more fees for managing investments. Bank of America rose 16 cents, or 1.2 percent, to $14.08 after it too reported surging earnings for the period, helped by cost-cutting and investment banking gains.

Banks and financial companies are expected to report the strongest earnings growth of all S&P 500 companies, according to data from S&P Capital IQ. The growth for the sector is expected to reach almost 20 percent, according to the data provider. That compares to the average growth of 3.4 percent forecast for all companies.

In commodities trading, the price of crude oil rose 20 cents, to $106.20 a barrel. Gold fell $10.20, or 0.8 percent, to $1,295.20 an ounce.

The dollar rose against the euro and the Japanese yen.

Among other stocks making big moves Wednesday:

— Yahoo rose $1.90, or 7.1 percent, to $28.78, after the company reassured investors that it would keep buying back its own stock. The internet company had already spent $3.6 billion buying back about 190 million of its shares since last year.

— American Express Co. fell $3.35, or 4.3 percent, to $74.92, after a report said European regulators are proposing to cap the lucrative processing fees the card company imposes.

— Mattel fell $2.48, or 5.3 percent, to $43.85, after its second-quarter net income fell 24 percent, hurt by weak sales in North America and continued softness in Barbie sales, as well as an asset impairment charge.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Angela IS the best RD

  2. We are a nation of speed. All of our younger lives are filled with deadlines, quotas and bottom lines. We start to ease out of the pressured rat-race when we finally see "retirement." The most enjoyable travel on the planet is passenger rail service. Indy to Chicago does not beat Megabus or Southwest Airlines in speed. Passenger rail however has the best seating, mammoth legroon, seat backs that recline to more than 45 degrees and employers that really want you to return as a customer. Indiana municipalities need to maintain subsidies to support this transportation mode. Losing it is loss for all of us.

  3. Good day! I just want to testify how i got my loan from Mr. Eric Lefkofsky after i applied several times from various loan lenders who claimed to also testify right in this forum,i thought the testimonies where real and i applied but they never gave me loan. I was in need of an urgent loan to start a business and i applied from various loan lenders who promised to help but they never gave me the loan. Until a friend of mine introduce me to this popular Mr. Eric Lefkofsky who promised to help me and indeed he did as he promised without any form of delay. I never thought there are still reliable loan lenders until i met Mr. Eric lefkofsky who indeed helped me with the loan and changed my belief. I promised to share this testimony after I got my loan. I don't know if you are in any way in need of a genuine and urgent loan,free feel to contact Mr. Eric Lefkofsky via their email{grouponfunding@hotmail.com}

  4. Its a THUG issue. Bleecker Street and NYX are thug bars. They attract thugs of all races. Places that attract thugs need to be kicked out of Broad Ripple. Ain't nobody got time for that!

  5. Hello everyone, My name is Marian Gareth, I am from the Texas, United State, am here to testify of how i got my loan from Mr Andre Frank {frankloancompany@yahoo.com} after i applied Two times from various loan lenders who claimed to be lenders right in this forum,i thought their lending where real and i applied but they never gave me loan. I was in need of an urgent loan to start a business and i applied from various loan lenders who promised to help but they never gave me the loan.Until a friend of mine introduce me to Mr Andre Frank the C.E.O of Andre Frank Loan Company who promised to help me with a loan of my desire and he really did as he promised without any form of delay, I never thought there are still reliable loan lenders until i met Mr Andre Frank, who really help me with my loan and changed my lief for better. I don't know if you are in need of an urgent loan, free feel to contact Mr Andre Frank on his email{ Frankloancompany@yahoo.com} for help

ADVERTISEMENT