THE Nasdaq jumped to a 10-year high as US stocks rallied yesterday after Fed Chairman Ben Bernanke’s first-ever press conference did nothing to short-circuit investors’ optimistic outlook on the economy.
All three major US stock indexes extended gains after comments from Bernanke at his press conference, where he reiterated the Fed’s stance that inflation was a transitory problem related largely to commodity price pressures.
The Nasdaq Composite Index closed at 2,869.88, the highest close for the index since 12 December, 2000. Among the day’s leading gainers were retailers and biotechnology names.
The Russell 2000 Index hit an all-time closing high of 858.31 as investors kept buying small-caps, a sector associated with a strong outlook for economic growth.
Tom Sowanick, chief investment officer of OmniVest in Princeton, said the Federal Reserve is “inviting asset inflation” as reflected in the price action in the equities market.
The Fed’s policy-setting Federal Open Market Committee said in a statement it intends to complete its $600bn ( ) bond buying programme in June as scheduled.
At the news conference, Bernanke said there was “a bit less momentum in the economy” and he foresaw “a relatively weak number, maybe under 2 per cent” for growth in gross domestic product in the first three months this year, indicating the Fed is likely to maintain its accommodative policy despite worries about inflation.
“He handled himself real well. He didn’t fumble anything,” said Alan Valdes, director of floor trading at DME Securities in New York. “In all honesty, I would give him a B-plus. He held himself up well. He didn’t trip over any questions.”
Biotech stocks helped boost the Nasdaq, as Regeneron Pharmaceuticals surged 28.6 per cent to $67.05 after its experimental cancer drug, Zaltrap, being developed with Sanofi-Aventis, extended survival in patients in a late-stage trial.
The Dow Jones industrial average gained 95.59 points, or 0.76 per cent, to 12,690.96. The Standard & Poor’s 500 Index rose 8.42 points, or 0.62 per cent, to 1,355.66. The Nasdaq Composite Index climbed 22.34 points, or 0.78 per cent, to 2,869.88.
General Electric rose 2.7 per cent to $20.65 after its finance chief said GE’s profit growth over the next few years will be the fastest it had seen in a decade. Boeing, Whirlpool and WellPoint also moved higher after topping analysts’ expectations.