Dow, S&P 500 hit Record Levels after Yellen Testimony
U.S. stocks moved higher Tuesday, with the S&P 500 and Dow industrials closing at records, as the market read Federal Reserve Chairwoman Janet Yellen’s testimony before Congress as a reassurance that a rate hike might not occur until the second half of the year.
The S&P 500 SPX, +0.28% finished up by 5.82 points, or 0.3%, at 2,115.48, while the Dow Jones Industrial Average DJIA, +0.51% gained 92.35 points, or 0.5%, to end at 18,209.19.
The Nasdaq Composite COMP, +0.14% added 7.15 points, or 0.1%, to end at 4,968.12, leaving it just 1.6% off its March 2000 peak. The tech-heavy index advanced for the 10th session in a row, scoring its longest winning streak since mid-2009, when it rose for 12 straight days.
Quincy Krosby, market strategist at Prudential Financial, said the market reaction to Yellen’s testimony indicated that her comments were perceived as dovish.
“The 10-year yields fell, the dollar gave up gains and stocks rose, even though those moves were not huge. At this point, just as the Fed is data-dependent, markets are data-dependent, too,” Krosby said.
“Today’s Janet Yellen is the same Yellen who in 1994 warned Alan Greenspan to be careful about raising rates too soon and too fast. The Fed needs to see more evidence that the economy is truly on a viable trajectory before beginning to normalize interest rates,” she said.
“They would not want to be in a position where they would have to cut rates shortly after the first hike,” she added
Kevin Mahn, chief investment officer at Hennion & Walsh Asset Management, argued that investors are no longer looking for the Fed’s direction.
“Janet Yellen and the Fed have not changed their view on policy. Last year Yellen said that rate hikes would probably start about six months after the end of the tapering process. Six months from the end of taper in October puts the rate hike schedule for spring and that’s the message from her today,” Mahn said.
“We believe a 25 basis point increase sometime between April and June is very likely and the markets will take it in stride,” Mahn said.
Individual movers & shakers: Shares in First Solar Inc. FSLR, +10.19% finished 10.2% higher for the biggest daily gain among S&P 500 components. First Solar and SunPower Corp. SPWR, +17.99% said late Monday that they plan an initial public offering for a pooled-asset spinoff.
Home Depot Inc. HD, +3.98% shares climbed 4% for the best performance among Dow stocks after the retailer’s quarterly results topped expectations.
Other markets: European stocks SXXP, -0.17% gained, with the Athens Composite Index GD, +0.02% surging, after initial comments on Greece’s reform proposal from European officials pointed to the approval of a four-month bailout extension.
In Asia, the Nikkei 225 NIK, -0.10% nabbed a fresh 15-year high. The dollar DXY, -0.26% was lower after giving up gains.
Crude-oil prices CLJ5, -0.45% ended slightly lower, while gold GCJ5, +0.85% also remained under pressure.
Source: MarketWatch
