Back To It: Dow Hits Record Highs Thursday

By: From CNN Money
By: From CNN Money


NEW YORK (CNNMoney) -- Hello again, all-time highs.

U.S. stocks soared back into record territory Thursday, as investors welcomed comments from Federal Reserve chairman Ben Bernanke.
The Dow Jones industrial average rallied nearly 170 points, or 1.1%, to end at a record high of 15,460, breaking its previous record set May 28.

The S&P 500 rose more than 1.3% to 1,675 -- also topping its May record. The Nasdaq jumped 1.6% to end at its highest level since September 2000.

The Bernanke market: The gains came after Bernanke said late Wednesday that monetary policy would remain "highly accommodative" for the foreseeable future.

Investors were spooked in May when Bernanke suggested the Fed could begin to scale back its $85 billion-per-month bond buying program this year. But top central bankers, including the chairman, have taken great pains to reassure investors that any tapering would depend on continued improvement in the economy.

"Clearly, the market has digested the shift in Fed policy and is realizing that this is not a very dramatic shift at all," said Hank Smith, chief investment officer at Haverford Trust. "And, if it occurs," he continued, the shift "would be a good thing because it means more confidence in the economy, at least from the Federal Reserve."

Bull still has legs: Smith said the gains reflect an improvement in sentiment as investors continue to see any pullback in stocks as an opportunity to buy. He said the recession in Europe and slowing growth in emerging economies makes the U.S. market particularly attractive, despite the below-average recovery.

Looking ahead, Smith expects volatility to remain high as the timing of any Fed action remains uncertain. But he said the market could still rise an additional 5% to 7% by the end of the year.

"Any pullback, or even a correction, would be welcomed by investors," he said. "There is a ton of money waiting for that."

European markets closed higher, and major Asian markets ended with gains.

Japan's benchmark Nikkei index moved 0.4% higher after the country's central bank said it would continue expanding its balance sheet. Jones said that comments from Japan's central bank have helped to buoy international markets.

In U.S. economic news, the number of Americans filing for first-time unemployment benefits rose to a two-month high, according to the government's weekly report. But economists were quick to brush off the rise as a result of volatile number-crunching, rather than a discouraging sign for the economy.

Separately, the 30-year mortgage rate rose to its highest level in nearly two years, according to mortgage financing company Freddie Mac. What's moving: Microsoft (MSFT, Fortune 500)announced a widely-anticipated reorganization of it's business operations, including a shakeup of high-level managers, according to various reports.

Shares of Yum! Brands (YUM, Fortune 500) reported earnings that beat expectations but worries about the KFC owner's growth in China pushed Yum Brands' stock lower.

AMD (AMD, Fortune 500) shares surged 11% after Bank of America analysts upgraded the company's stock. Other tech stocks hit fresh record highs, including Google (GOOG, Fortune 500)and Amazon (AMZN, Fortune 500).

Bernanke's comments about maintaining low interest rates boosted homebuilders' stocks. D.R. Horton (DHI), Lennar (LEN) and Toll Brothers (TOL) gained between 6% and 9%.

Conversely, regional banks, which usually benefit from higher rates, came under pressure. Shares of Regions Financial Corporation (RF, Fortune 500), Comerica (CMA), KeyCorp (KEY, Fortune 500) and SunTrust Banks (STI, Fortune 500) fell between 1.5% to 3%.

Quarterly results are coming up Friday from mega-banks JPMorgan (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500).

Overall, earnings for companies in the S&P 500 are expected to grow 0.8% versus last year, according to FactSet.


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