Closing Bell: Bernanke Allays Fears, S&P 500 Has Record Close

new york stock exchange traders investors wall street ben bernanke federal reserve stimulus
Richard Drew/AP

Ben Bernanke appears to have put investor fears to rest -- for the time being, anyway. Stocks surged Thursday following the Federal Reserve chairman's comments late Wednesday that the economy still needs "a highly accommodative monetary policy for the foreseeable future," with investors pushing the Standard & Poor's 500 index to an all-time closing high.

Investors took Bernanke's speech as an assurance that the Fed isn't about to begin pulling back from its bond-buying program, which has helped to drive stocks much higher this year.

The Dow Jones industrial average (^DJI) jumped 169 points, or 1.1 percent to close at 15,461, while the S&P 500 (^GPSC) advanced 22 points, or 1.4 percent, to 1,675, besting its previous all-time closing record of 1,669 on May 21. The Nasdaq (^IXIC) climbed 58, or 1.6 percent, to 3,578.

The Fed is currently buying $85 billion a month in bonds to keep interest rates low and to encourage spending and hiring. After Bernanke's remarks, stocks that are helped by low interest rates, such as home builders, perked up.

Homebuilders D.R. Horton (DHI) rose $1.93, or 9.2 percent, to $22.98, Lennar (LEN) climbed $2.88, or 8.3 percent, to $37.44, and PulteGroup (PHM) advanced $1.37, or 7.2 percent, to $20.39.

Fears of a Fed pullback and a recovering housing market have prompted mortgage rates to climb in recent weeks -- and this week was no exception. Freddie Mac said the average rate on a 30-year mortgage rose to 4.51 percent from 4.29 percent the previous week. The average on the 15-year fixed mortgage increased to 3.53 percent from 3.39 percent last week. That's the highest since August 2011.

Mortgage rates may be rising, but the nation's deficit is falling. The federal government reported a rare surplus of $116.5 billion in June, the largest for a single month in five years. The gain kept the nation on track for its lowest annual deficit in half a decade. Treasury said the surplus was due in part to $66.3 billion in dividend payments by Fannie Mae and Freddie Mac for the taxpayer support they received in 2008 at the height of the financial crisis.

Stocks in the news Thursday:

  • Shares of PriceSmart (PSMT) fell after the warehouse club operator reported its fiscal third quarter net income below Wall Street expectations. Shares fell $1.16, or 1.3 percent, to $90.47, after earlier falling as low as $85.36.

  • Bridgepoint Education (BPI) rose $3.31, or 26 percent, to $15.92, after the for-profit education company said its Ashford University had won accreditation. Bridgepoint, which also operates the University of the Rockies, struggled with accreditation problems for much of 2012.

  • Microsoft (MSFT) rose 98 cents, or 2.8 percent, to $35.68, after the company announced a major reorganization. The world's largest software maker has been struggling with a steady decline in PC demand as people turn to tablets and other mobile devices.

  • Rockwell Medical Technologies (RMTI) jumped 59 cents, or 15.7 percent, to $4.35, after the drug developer said an experimental treatment for kidney patients took a step toward winning approval.

  • Celgene (CELG) rose $9.84, or 7.9 percent, $134.92 after the Swiss drugmaker said its cancer drug, Revlimid, met its goals in a late-stage study.

  • The Federal Trade Commission has signed off on Hertz's $2.3 billion acquisition of rival rental-car company Dollar Thrifty Automotive Group. As part of that deal, Hertz sold off its former Advantage car rental business, select airport operations and some other assets. Shares of Hertz Global Holdings (HTZ) rose 3.2 percent to $27.07.

What to watch Friday:

  • JPMorgan Chase (JPM) and Wells Fargo (WFC) report quarterly earnings before U.S. stock markets open.

  • The Labor Department releases data on producer prices for June at 8:30 a.m. Eastern Time.

  • At 9:55 a.m., the University of Michigan issues its first reading of consumer sentiment for July.

-Compiled from staff and wire reports.