By: Kate Gibson
February 11, 2014
U.S. stocks surged on Tuesday, with the Dow Jones Industrial Average rising triple digits and the Nasdaq Composite turning positive for the year, as Federal Reserve Chair Janet Yellen reassured Wall Street that the Fed would continue the central bank’s policy of providing monetary stimulus to bolster the economy.
“The market does not want uncertainty, and she certainly didn’t deliver any surprises,” said Dorothy Weaver, co-founder of Collins Capital and former chairman of the Federal Reserve Bank in Miami.
“She hit the right notes; the theme of the day is continuity. If there were one area where she made news, it was her view that cyclical issues are still hanging over the economy, and additional Fed stimulus is likely,” said Dan Greenhaus, chief global strategist at BTIG.
The market rally is “principally due to the fact that Janet Yellen did nothing to spook the market, directly or inadvertently. In fact, she did quite the opposite. I think the market is relieved by her commentary, that she’s going to remain extremely accommodative,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
“A contributing factor is the fact that the Republicans are talking about a clean bill to raise the debt ceiling; the fiscal dysfunction has become a back story, so we’re seeing the whole political circus beginning to fade,” said Luschini, referring to the announcement Tuesday by House GOP leaders that they will this week advance an increase in the government’s borrowing cap without any additional measures attached.
“She continues to give every signal that the Fed will continue to remain very accommodative; they understand there is more work to be done,” said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.
In her prepared remarks before the House Financial Services Committee, Yellen stressed continuity in monetary policy and said the recovery in the labor market is far from finished.
Sprint shares jumped after the telecommunications company reported fourth-quarter revenue that beat expectations. CVS Caremark gained after the prescription drug provider tallied fourth-quarter profit above estimates.
After rising as much as 211 points, the Dow Jones Industrial Average rose 192.98 points, or 1.2 percent, to 15,994.77, with United Technologies leading gains that included 29 of its 30 components.
Energy led gains among the 10 major sectors on the S&P 500, which rose 19.91 points, or 1.1 percent, to 1,819.75.
Turning positive for the year, the Nasdaq climbed 42.87 points, or 1 percent, to 4,191.04.
Tuesday’s rally marked the best four-session stretch for both the S&P 500 and the Nasdaq in more than a year.
Advancers outdid decliners by a more-than 3-to-1 ratio, with almost 710 million shares traded. Composite volume neared 3.7 billion.
The dollar edged lower against the currencies of major U.S. trading partners and the yield on the benchmark 10-year Treasury note used in figuring mortgage rates and other consumer loans rose 6 basis points to 2.725 percent.
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