Tech stocks lead broad gains; Dow hits new high
Technology companies led U.S. stocks higher Wednesday in a broad rally that helped nudge the Dow Jones industrial average to a new high.
In remarks before Congress, Federal Reserve Chairwoman Janet L. 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 amid a slowdown in inflation and the U.S. economy’s sluggish growth.
Yellen’s remarks put investors in a buying mood and sent bond yields lower, stoking demand for real estate companies, utilities and other stocks that pay high dividends. 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 Standard & Poor’s 500 index climbed 17.72 points, or 0.7%, to 2,443.25. The Dow rose 123.07 points, or 0.6%, to 21,532.14, a record high. Earlier in the day, the Dow was up more than 171 points, and it last set a record high June 19.
The Nasdaq composite jumped 67.87 points, or 1.1%, to 6,261.17. The Russell 2000 index of smaller-company stocks advanced 11.27 points, or 0.8%, to 1,424.32.
The stock market looked poised for a big move early on, climbing in preopening trading as investors began to size up Yellen’s prepared remarks, which were released before 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.
The yield on the 10-year Treasury note fell to 2.32% from 2.37%. Yields affect rates on mortgages and other consumer loans.
Technology companies led the market higher. PayPal rose 3.3% to $56.55. Nvidia advanced 4.3% to $162.51 and Activision Blizzard climbed 5.2% to $61.02.
Real estate investment trusts and other stocks that pay high dividends benefited from rising bond prices, which pulled bond yields lower. Crown Castle International rose 1.8% to $100.05. American Tower climbed 2.3% to $133.88.
NRG Energy was the biggest gainer in the S&P 500. It soared 29.4% to $21.09 after the company said it plans to raise as much as $4 billion through asset sales in order to lower its debt.
Several airlines rose after American Airlines Group and United Continental reported solid results for June. American Airlines climbed 4.2% to $53.80. United Continental went up 4.7% to $80.53. Delta Air Lines increased 2.2% to $55.48.
Oil prices wavered early Wednesday, but recovered after a report came out showing that U.S. crude oil inventories declined sharply last week.
Benchmark U.S. crude rose 45 cents, or 1%, to $45.49 a barrel. Brent crude, used to price international oils, rose 22 cents, or 0.5%, to $47.74 a barrel.
Wholesale gasoline stayed at $1.52 a gallon. Heating oil slipped less than 1 cent to $1.47 a gallon. Natural gas fell 6 cents, or 2%, to $2.99 per 1,000 cubic feet.
Major stock indexes in Europe also posted solid gains Wednesday. Germany’s DAX climbed 1.5%, France’s CAC 40 jumped 1.6% and Britain’s FTSE 100 gained 1.2%.
Markets in Asia finished mostly lower. Japan’s Nikkei 225 fell 0.5% and South Korea’s Kospi lost 0.2%. Hong Kong’s Hang Seng index rose 0.6%.
The dollar fell to 113.25 yen from 113.84 yen. The euro fell to $1.1416 from $1.1476.
Gold rose $4.40 to $1,219.10 an ounce. Silver rose 14 cents to $15.89 an ounce. Copper rose 1 cent to $2.68 a pound.
UPDATES:
2:55 p.m.: This article was updated with closing prices, context and analyst comment.
This article was originally published at 7 a.m.
