Stocks bounded higher yesterday as bullish congressional testimony from Alan Greenspan and anticipation for a strong midquarter update from...
NEW YORK — Stocks bounded higher yesterday as bullish congressional testimony from Alan Greenspan and anticipation for a strong midquarter update from Intel brightened Wall Street’s mood and overshadowed a surge in oil prices.
The Dow Jones industrial average rose 26.16 to 10,503.02, after spending the first part of the session in negative territory.
Microsoft, one of the 30 Dow stocks, added 11 cents to close at $25.51 a share. Boeing, also a Dow stock, gained 64 cents to $65.11.
The broader gauges also closed higher. The Standard & Poor’s 500 index was up 6.26 at 1,200.93. The Nasdaq composite index added 16.73 to 2,076.91.
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Crude oil surged $1.74 to settle at $54.28 per barrel on the New York Mercantile Exchange a day after posting a steep decline.
The Federal Reserve chairman told lawmakers the economy seems to be on “reasonably firm footing,” with inflation under control. Greenspan’s generally positive assessment supports the view that the Fed, which has raised interest rates eight times over the past year, will likely continue nudging rates higher at a gradual pace. Fed policy-makers are widely expected to raise the federal funds rate by another quarter-point to 3.25 percent at their next meeting, set for June 29-30.
“Once everyone sifted through all the comments, the realization was that he hasn’t changed his thoughts about the economy,” said Peter Cardillo, chief strategist at S.W. Bach in New York. “He doesn’t think the economy is ready to fall off a cliff, and that’s basically a strong fundamental for the stock market.”
Greenspan’s remarks had some analysts speculating that the Fed would likely continue raising short-term rates through the third quarter, perhaps to the 4 percent level. With the rate cycle’s end in sight, stock investors can look forward to more stability, said Hans Olsen, chief investment officer at Bingham Legg Advisers, a private wealth-management firm in Boston.
“You can start to see the end is near. … The interest rate increase regime is coming to a close, and that is an unambiguous positive development for equities,” Olsen said. “For the balance of the year, I think that sets us up for a good second half.”
The Labor Department reported that the number of people filing new claims for unemployment benefits fell by 21,000 last week, the biggest decline in seven weeks. Analysts attributed the improvement to fewer layoffs in the auto industry and a shortened workweek because of the Memorial Day holiday, which gave unemployed workers one less day to file claims.