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US STOCKS-Wall St gains after Fed chief cites flexible policy
July 17, 2013 / 5:42 PM / 4 years ago

US STOCKS-Wall St gains after Fed chief cites flexible policy

* Yahoo at highest price since May 2008

* Housing starts slide in June to lowest since last August

* Fed’s Beige Book expected at 2 p.m. EDT

* Dow up 0.02 pct, S&P 500 up 0.3 pct, Nasdaq up 0.3 pct

By Alison Griswold

NEW YORK, July 17 (Reuters) - U.S. stocks rose modestly on Wednesday after Federal Reserve Chairman Ben Bernanke said the central bank’s plan to start winding down its monetary stimulus later this year depended on the economy’s performance.

In his twice-yearly report to Congress on monetary policy, Bernanke stayed near the timeline he first laid out last month, that the Fed’s bond-buying program would cease by mid-2014, though he stressed the plan was not set in stone.

Nine of the 10 S&P 500 industry sector indexes moved higher, led by gains in commodities and financials. Stocks pulled back from session highs, but stayed in positive territory after falling on Tuesday and snapping the S&P 500’s eight-day string of gains.

“I think has probably accomplished what he wanted to, which was not to move the markets at all,” said Robert Francello, head of equity trading for Apex Capital in San Francisco.

“He’s out reiterating. He’s not getting any more hawkish in tone.”

Financial markets have been sensitive to speculation over when the Fed will begin to scale back its $85 billion a month in bond purchases. Bernanke’s comments on May 22 and minutes from a Fed meeting released on that date were the catalysts for a drop of nearly 6 percent in the S&P 500 in the month that followed.

But statements from Bernanke and other Fed officials in recent weeks have soothed investors’ concerns and erased those declines, with the S&P 500 rallying to a record closing high on Monday. The benchmark index is less than half a percent off the all-time intraday high of 1,687.18 it reached on May 22.

The Dow Jones Industrial Average was up 2.65 points, or 0.02 percent, at 15,454.50. The Standard & Poor’s 500 Index added 4.84 points, or 0.29 percent, at 1,681.10, and the Nasdaq Composite Index rose 9.22 points, or 0.26 percent, at 3,607.72.

Yahoo Inc’s lackluster results failed to put off Wall Street analysts, who focused on its stake in the fast-growing Chinese e-commerce firm Alibaba and product development efforts. The company’s stock was the S&P 500’s best performer. Yahoo jumped 8.2 percent to $29.08, its highest price since May 2008. Earlier, Yahoo hit an intraday high at $29.24.

Bank of America Corp, up 3.5 percent at $14.40, and BNY Mellon Corp, up 2.1 percent at $30.99, led the financial sector higher after both banks reported quarterly earnings. Bank of America was among the best performers in both the Dow and the S&P 500.

The S&P financial sector index gained 0.7 percent.

American Express fell 2.1 percent to $76.62 and ranked as the biggest drag on both the Dow and S&P 500 after the European Commission said it would propose limits on fees that banks can charge to process debit-card and credit-card transactions.

Economic data showed housing starts dropped 9.9 percent in June to a seasonally adjusted annual rate of 836,000 units, the lowest level since August last year, and below the 959,000 forecast.

Other data on Wednesday will include the Fed’s Beige Book of regional economic conditions due at 2 p.m. (1800 GMT).

St. Jude Medical was among the the S&P 500’s best performers after its profit topped expectations. The stock rose 6.8 percent to $51.76.

Analysts expect S&P 500 companies’ second-quarter earnings to have grown 3.3 percent from a year earlier, with revenue up 1.2 percent, data from Thomson Reuters showed.

Other S&P 500 companies set to report earnings after the bell on Wednesday include eBay Inc, International Business Machines and Intel Corp.

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