Created on Wednesday, 22 May 2013 Written by BERNARD CONDON,AP Business Writer
NEW YORK (AP) — Stocks are moving higher Wednesday after Federal Reserve Chairman Ben Bernanke said it was too soon for the central bank to pull back on its economic stimulus programs.
Investors were also encouraged by news that sales of previously-occupied U.S. homes rose last month to the highest level in three and a half years.
The Dow Jones industrial average was up 40 points before Bernanke began his testimony before a congressional committee at 10 a.m., then jumped as much as 154 points shortly after he began speaking.
"It's up, up and away," said Stephen Carl, head of stock trading at the Williams Capital Group. "Bernanke started talking about continuing (stimulus) and that kind of fueled things."
The Dow pared its gain after Bernanke told lawmakers in a question-and-answer session that the central bank could not rule out tapering its stimulus programs by the fall.
By 12:30 p.m. Eastern Daylight Time the Dow was up 100 points at 15,488, an increase of 0.7 percent.
The Standard and Poor's 500 index rose 11 points to 1,680, an increase of 0.7 percent.
The Federal Reserve has been keeping short-term interest rates near zero to encourage people and businesses to borrow and spend more. The Fed has also been buying $85 billion worth of bonds each month to keep long-term interest rates low.
Later on Wednesday, the Fed will release minutes of its latest policy meeting.
The National Association of Realtors said Wednesday that sales of previously occupied homes rose to a seasonally adjusted annual rate of 4.97 million in April, helped by a jump in the number of homes available for sale.
All 10 industry groups in the S&P 500 were higher. Health-care stocks led the index with a gain of 1.6 percent.
Among stocks making big moves:
—Bristol-Myers Squibb jumped 7 percent, or $3.16, to $47.22 after a Citigroup analyst raised his rating on the drugmaker. The analyst said the company could be a big winner with a group of cancer treatments under development.
—Saks rose $1.89 to $15.57, or 14 percent, after The New York Post reported the luxury retailer had hired Goldman Sachs to explore options for the company, including a possible sale. A spokesman for Saks declined to comment.
—Target fell $2.54, or 4 percent, to $68.73 after announcing a 26 percent drop in first-quarter profits. The company also said full-year earnings may come in lower than previously expected.
— Homebuilders rose after the home sales report came out. Lennar rose $1.18 to $43.65, or 3 percent. Toll Brothers, which also reported a 46 percent surge in second-quarter earnings, jumped $2.63, or 7 percent, to $38.63.
On Tuesday, stocks rose after James Bullard, president of the St. Louis branch of the Federal Reserve, told an audience in Germany that the central bank should continue buying bonds.
Both the Dow and the S&P 500 are up 18 percent since the start of the year.
The Russell 2000 index of small-company stocks rose six points to 1,003, a gain of 0.4 percent. The index is at a record high and is headed for its first close above 1,000 points.
The surging Russell is a sign that investors are increasingly comfortable with risk. Unlike many of their big counterparts, small companies lack the financial resources to easily ride out economic downturns and investors worried about future economic growth tend to avoid them.
The Dow and the S&P are also at records.
Another sign of surging confidence on Wednesday: Investors sold Treasury bonds, which are considered one of the safest assets. Selling of the benchmark 10-year Treasury note pushed its yield up to 2.02 percent from 1.93 percent late Tuesday.
The Nasdaq composite was up 11 points at 3,518, or 0.7 percent.
The price of gold fell $6.50 to $1,371 an ounce, an drop of 0.5 percent. Crude oil fell $1.34 to $94.82 a barrel on the New York Mercantile Exchange.