Dow hits fresh high on central bank promises

US stocks rose yesterday, with the Dow closing at yet another record high, in the wake of Wall Street’s first three-day losing streak of the year.

Investors took heart from central banks’ assurances that they will keep policies designed to foster global growth.

Consumer confidence was the strongest in May in over five years, while home prices accelerated in March by the most in nearly seven years. The reports showed the US economy’s resilience despite the pinch of belt-tightening from automatic cuts in federal spending.

Equity investors have been very attuned to monetary policy, with the major US stock indexes last week posting their first negative week since mid-April on lingering concerns that the Federal Reserve may scale back its stimulus measures sooner than expected.

Those concerns were eased after the Bank of Japan and the European Central Bank reaffirmed that their accommodative policies would remain in place, helping indexes recover from last week’s decline.

On Monday, when US markets were closed for the Memorial Day holiday, ECB executive board member Joerg Asmussen said the policy would stay as long as necessary. Yesterday, BOJ board member Ryuzo Miyao said it was vital to keep long- and short-term interest rates stable.

The Dow Jones industrial average gained 106.29 points, or 0.69 per cent, to a record 15,409.39 at the close. The Standard & Poor’s 500 Index added 10.46 points, or 0.63 per cent, to finish at 1,660.06. The Nasdaq Composite Index rose 29.74 points, or 0.86 per cent, to end at 3,488.89.

Bank of America rose 0.8 per cent to $13.35 while Citigroup gained 2.5 per cent at $51.79. The KBW Bank index advanced 1.3 per cent.