Investors Embrace Bernanke's Remarks
Friday, April 28, 2006
NEW YORK, April 27 -- Stocks closed mostly higher Thursday as Wall Street brushed aside concerns about a Chinese interest rate hike to focus on comments by Federal Reserve Chairman Ben S. Bernanke that a pause in U.S. rate increases may be ahead.
In trading pushed and pulled by the crosscurrents of earnings reports, fluctuating energy prices and international events, Bernanke's comments overrode all other distractions, analysts said.
"What he's coming through very clearly and saying is we will probably pause soon, but don't assume we're done because we pause. . . . But I think the market is just reacting to 'Hey, hey, Ben said we might be done soon,' " said Jeff Kleintop, chief investment strategist for PNC Wealth Management. "Whenever you take a little uncertainty out of the picture, well, the market is going to like that."
The Dow Jones industrial average gained 28.02, or 0.3 percent, to close at 11,382.51.
Broader stock indicators also moved higher. The Standard & Poor's 500-stock index rose 4.31, or 0.3 percent, to 1309.72, and the Nasdaq composite index rose 11.32, or 0.5 percent, to 2344.95.
The gains in stocks offset early reaction to an announcement by Chinese officials that they will raise interest rates to slow a churning economy. China's rapid growth has accounted for a sizable share of worldwide demand for raw materials and other goods, and the announcement pushed down prices for oil, commodities and European stocks.
But momentum was reversed in U.S. equity markets after Bernanke started talking.
While the Fed chairman told Congress that rising energy prices could jeopardize a strong economy and lead to further rate hikes, the market chose to focus on comments suggesting that a temporary pause may be coming.
Intel rose 59 cents, to $20.08, after announcing a restructuring.
Comcast rose $1.25, to $30.45, after reporting a tripling of profit.
Exxon Mobil fell 68 cents, to $62.42, after profit failed to meet analysts' estimates.
New York Stock Exchange composite index rose 10.66, to 8440.52.
American Stock Exchange index fell 8.53, to 1991.73.
Russell 2000 index of smaller-company stocks fell 3.83, to 761.40.
NYSE: 2.92 billion shares, up from 2.57 billion on Wednesday. Advancers narrowly outnumbered decliners.
Nasdaq: 2.61 billion shares, up from 2.14 billion. Decliners outnumbered advancers 6 to 5.
Crude oil for June delivery: $70.97, down 96 cents.
Gold for current delivery: $633.30 a troy ounce, down from $638.80 on Wednesday.