Dow hits new high as stocks gain
Technology companies again led U.S. stocks higher Wednesday in a broad rally that helped nudge the Dow Jones industrial average to a new high.
The Standard & Poor’s 500 index gained 17.72 points, or 0.7 percent, to 2,443.25. The Dow rose 123.07 points, or 0.6 percent, to 21,532.14, a record high. The average, which had been up more than 171 points, last set a record high on June 19.
The Nasdaq composite added 67.87 points, or 1.1 percent, to 6,261.17. The Russell 2000 index of smallercompany stocks picked up 11.27 points, or 0.8 percent, to 1,424.32.
In remarks before Congress, Federal Reserve Chairman Janet Yellen raised the possibility that the central bank would consider slowing the pace of its interest-rate increases if inflation remained persistently below its target level.
The move assuaged concerns among some traders worried that the Fed has been moving too quickly to raise interest rates despite a slowdown in inflation and the U.S. economy’s sluggish growth of just 1.4 percent in the first quarter.
Yellen’s remarks put investors in a buying mood and sent bond yields lower, stoking demand for real estate companies, utilities and other high-dividend paying stocks. Materials companies also posted hefty gains.
“Investors would prefer lower interest rates, particularly if the economy isn’t gaining the kind of traction
that would warrant a faster rate-hike path,” said Quincy Krosby, chief market strategist at Prudential Financial. “This is positive for the markets.”
The stock market looked poised for a big move early on, climbing in premarket trading as investors began to size up Yellen’s prepared remarks, which were released ahead of her testimony.
The indexes opened higher across the board and stayed in the green the rest of the day. All 11 sectors in the S&P 500 index notched gains.
In her semiannual testimony before the House Financial Services Committee, Yellen said the central bank expects to keep raising a key interest rate at a gradual pace, and raised the possibility that the
pace of rate increases would be slower than previously expected should inflation remain below its target level of 2 percent annual growth.
The yield on the 10-year Treasury note fell to 2.32 percent from 2.37 percent late Tuesday. Yields affect rates on mortgages and other consumer loans.
Technology companies led the market higher. PayPal gained $1.79, or 3.3 percent, to $56.55. Nvidia rose $6.63, or 4.3 percent, to $162.51. Activision Blizzard added $3.04, or 5.2 percent, to $61.02.
Real estate investment trusts and other high-dividend paying stocks benefited from rising bond prices, which pulled bond yields lower. Crown Castle International rose $1.76, or 1.8 percent,
to $ 100.05. American Tower climbed $2.95, or 2.3 percent, to $133.88.
NRG Energy was the biggest gainer in the S&P 500. It soared 29.4 percent after the company said it plans to raise up to $4 billion through asset sales in order to lower its debt. The stock climbed $4.79 to $21.09.
Oil prices wavered early Wednesday, but recovered after a report showing that U.S. crude-oil inventories declined sharply last week.
Benchmark U. S. crude rose 45 cents, or 1 percent, to settle at $45.49 per barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, gained 22 cents, or 0.5 percent, to close at $47.74 per barrel in London.
Specialist Thomas McArdle (center) works with traders Wednesday at his post on the floor of the New York Stock Exchange.