Bernanke rally sends Dow, S&P to new highs

Stocks soar after the Federal Reserve chairman says the economy still needs help, and the Fed expects to keep rates low.

By Charley Blaine Jul 11, 2013 5:16PM
Ben Bernanke © Richard Drew/AP Photo)Updated: 12:55 a.m. ET, Friday

The 2013 stock market rally officially became the Ben Bernanke rally on Thursday.

The Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) closed at record highs. The Dow hit a new intraday high as well.

At the same time, the Nasdaq Composite Index ($COMPX) closed at a 13-year high, and Amazon.com (AMZN) briefly topped $300 for the first time before closing at $299.66.

The rally was set off when Bernanke told attendees at the National Bureau of Economic Research late Wednesday that the Fed is nowhere near ready to raise interest rates. While getting better, he said, the economy is still weak will require help for some time to come.

How long the rally will last is, of course, the big question. Futures trading suggests a flat-to-lower open for stocks on Friday. Many experts, however, see Bernanke's insistence that low rates aren't going away for at least another 18 months as offering a strong chance that stocks will push higher for some time, with a pullback after that. There is a consensus the the S&P 500 might top out at around 1,750. The market dipped as much as 5% in June.

The Dow closed up 169 points to 15,461, breaking a closing record of 15,409, set on May 28. The point gain was the largest for the blue chips since June 13. The blue chips also hit a new intraday high. The S&P 500 jumped 22 points to 1,675, breaking a record set on May 21. The Nasdaq's close of 3,578, up 58 points, was its best since Sept. 29, 2000.

With Thursday's rally, the Dow is up 18% for the year. The S&P 500 is up 17.4% and the Nasdaq is up 18.5%.

Bernanke's comments came during a question-and-answer question at the NBER meeting. He had just given a lecture commemorating the Fed's 100th anniversary.

While housing, auto sales and confidence measures suggest consumers are feeling better about the economy, he said, the jobless rate is still too high, there's a risk that low inflation could become deflation, and the economy faces a big drag from continuing government spending at all levels.

By the time, the Q-and-A session was done, futures trading suggested a huge rally for stocks on Thursday. The rally was good for gold (-GC), up $32.50 to $1,279.90 an ounce; silver (-SI), up 79.1 cents to $19.96, and platinum (-PL), up $39.50 to $1,407.60 an ounce.

All had been drubbed in June, as traders worried the Fed was about to raise rates sharply.

In fact, the 10-year Treasury yield fell to 2.57% from Wednesday's 2.68% and is down from 2.715% on Friday, after surging from 1.61% in early May.

Crude oil (-CL) dropped $1.61 to $104.91 in New York.

Friday's market will be heavily influenced by quarterly results from JPMorgan Chase (JPM) and Wells Fargo (WFC), due before the open.

The consensus is for JPMorgan to report $1.44 a share, up from $1.21 a year ago. Wells Fargo is seen earning 93 cents, up from  82 cents a year ago.

JPMorgan was up 31 cents to $55.14, just below its 52-week high of $55.90. Wells Fargo was off 18 cents to $41.89.

Housing and materials stocks were the big gainers on the day. Housing was a winner because of the prospect of low interest rates. D.R. Horton (DHI), Lennar (LEN) and PulteGroup (PHM) were the second, third and fifth best S&P 500 performers.

Materials stocks gained because the dollar moved lower against the Japanese yen, primarily -- and were led by gold miners. Gold-miner Newmont Mining (NEM), iron-ore producer Vale (VALE) and copper-miner Freeport-McMoRan Copper & Gold (FCX) were each 4% higher.

The S&P 500 was led by chip maker Advanced Micro Devices (AMD), up 47 cents to $4.45.

All of the 30 Dow stocks saw gains, led by Intel (INTC), Microsoft (MSFT) and Walt Disney (DIS). Microsoft (which owns and publishes Top Stocks, an MSN Money site) announced a corporate reorganization.

Meanwhile, 450 S&P stocks were higher, led by those housing stocks, and 95 Nasdaq-100 ($NDX) stocks were higher, led by Randgold Resources (GOLD) and Celgene (CELG).

Facebook (FB) was up 1 cent to $25.81. Apple (AAPL) was $6.56 to $427.29.

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25Comments
Jul 11, 2013 8:23PM
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Isn't it more a National Security issue that this boob (Ben Bernanke) can utter a few meaningless words and cause a corrupt financial sector to indenture our future with bets on dead businesses? Did Bernanke state EXACTLY which companies are sustaining without his false currency infusions? HE DID NOT. Instead, he said-- create more jobs and I'll stop the QE. But everyone KNOWS that there is a job blockade in place to PREVENT the end of QE! If you don't think we are terrorism victims, you don't know much...
Jul 11, 2013 5:52PM
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Confucius say: That which is easily acquired is more easily lost.
Jul 11, 2013 9:49PM
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I am hardly a "rightie" and I strongly disagree with the Feds actions. I strongly disagreed with Obama keeping Uncle Ben to begin with. Now he has laid down with Uncle Ben and has to be accountable for any future financial issues that arise from keeping rates low for too long and the Fed growing it's balance sheet to infinity.

Glass Steagall was in place to prevent things like 500-700 Trillion in Scam Derivatives floating across the Globe. Rising interest rates are free markets way to prevent bad behavior from too much cheap money. If you want to know if Uncle Ben has done his job or not, look at the Velocity of Money. That clearly shows that Uncle Ben has clearly Failed. You can't base success or failure solely on short term moves of the Stock Market. As quickly as those gains have been made, they can be lost if you never lock in profits. Uncle Ben or his Successor will lose control of this never before attempt Grand Scam. Then things won't be so peachy and rosey anymore.
Jul 11, 2013 7:40PM
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The record high for the Dow is 15,542. All anyone need do is look at the 52 week high. They haven't surpassed that yet. Opinion----this bubble won't pop until the next POTUS is in.  BO doesn't want to take the hit on his watch. Timing might be the key on this move?
Jul 11, 2013 6:45PM
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It's been a nice ride, I don't know who to give credit to.....Maybe myself, yeah maybe that's it.
Jul 11, 2013 6:10PM
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You whining DOOMERS who have been out of the stock market these past few years.  You habitual arrogant cowards.   You should be hiding in embarrassment for being so stupid.  And you fools have the audacity to criticize the bulls. 
Jul 11, 2013 6:44PM
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What a powerful man whose words can move trillions around the world!!!

He can lift and sink markets.

When he finally pulls back a little the economy will be so strong we hardly notice.

Jul 11, 2013 6:52PM
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LOM..... yes I held EGO, have been off and on, for sometime. (years) It popped 11% today.

 

And I'm sure you saw what happend in the REITS...coming back I hope.

Jul 11, 2013 5:39PM
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Once again, thank you Dr Bernanke for having successfully utilized your knowledge of what went wrong during the Great Depression to ensure that this time, it all went right.

And thank you, Charley Blaine, for putting up with the plethora of putrid, politically-oriented comments that pollute this placid posting.  You are a real sport.

Jul 11, 2013 7:34PM
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Keep inflating stocks by pumping $85 billion a month into the markets.  Great rally.  Can't wait to see the bubble pop.  
Jul 11, 2013 7:16PM
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Sure...just keep buying...it has nowhere to go but up!!!   LOL

I'd like to hear from the "experts" why it is so high, and why it is expected to stay that way?

Jul 11, 2013 8:17PM
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Always amusing to see the anti-Obama comments from all the righties. Fact is he's doing a solid job, even without cooperation from the House, and he's a far better President than any of the GOPers could ever hope to be. Face it righties. Your Presidents suck, your Senators and Reps suck, and you suck.
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