Dow Jones and S&P hit records on Fed pledge

THE S&P 500 index and the Dow industrials closed last night at record highs, a day after Federal Reserve chairman Ben Bernanke said the Fed will keep a loose monetary policy for some time to lower the unemployment rate.

Bernanke said after the market’s close on Wednesday the US jobless rate of 7.6 per cent overstated the health of the labour market. He said a “highly accommodative” policy is needed for the foreseeable future, triggering a rally in equity futures.

The S&P closed above its previous all-time high of 1,669.16 on 21 May and the Dow surpassed its high of 15,409.39 on 28 May.

“Having Bernanke come out obviously worked, giving the market some stability,” said Quincy Krosby of Prudential Financial.

“It’s almost as if the markets need to hear this over and over again.”

After closing at its previous record, the S&P 500 in June posted its first negative month in eight as Bernanke hinted the Fed could begin this year to wind down the bond buying programme partly responsible for the rally in stocks, known as quantitative easing.

More than 85 per cent of shares on the New York Stock Exchange and almost 70 per cent of those on the Nasdaq rose yesterday.

All 10 of the S&P 500 industry sectors advanced, with five of them rising more than 1.5 per cent.

The Dow Jones industrial average rose 169.26 points or 1.11 per cent, to 15,460.92.

The S&P 500 gained 22.4 points or 1.36 per cent, to 1,675.02 and the Nasdaq Composite added 57.55 points or 1.63 per cent, to 3,578.3.