Relief Over Debt Ceiling, Fed Lift Wall Street for Fourth Day
February 12, 2014 3:18 PM EST
Wall Street rose for a fourth straight session on Tuesday as Congress agreed to advance legislation extending U.S. borrowing authority and the Federal Reserve's new chief held off from making any changes to its schedule for trimming stimulus.
Wall Street (Photo: Reuters)
The gains were broad, with all 10 S&P 500 sectors up for the day and about 75 percent of New York Stock Exchange-traded stocks ending higher. About 67 percent of Nasdaq-listed shares closed in positive territory, while the S&P 500 ended just 1.6 percent away from its record closing high.
Republican leaders in the U.S. House of Representatives caved in to demands by President Barack Obama and agreed to advance legislation increasing Washington's borrowing authority, removing a potential market headwind.
Fed Chair Janet Yellen emphasized continuity in the U.S. central bank's policy strategy of cutting asset purchases by $10 billion a month, saying she strongly supports the approach of her predecessor, Ben Bernanke. In her first public comments as Fed chief, Yellen also said that while the U.S. unemployment rate has fallen recently, labor market conditions needed to improve further.
"No one was really expecting a major debt ceiling showdown or changes in tapering, but anticipation is one thing, and the experience is another," said John Carey, portfolio manager at Pioneer Investment Management in Boston. "Everyone is more relaxed now that those issues are officially off the table."
The Fed's policies have been credited with driving the market's steep gains in 2013, and those accommodative measures are expected to keep a floor under stock prices for as long as they continue. However, had the pace of ending the program been slowed, it may have raised concerns that the economy was still not strong enough to grow on its own.
The Dow Jones industrial average .DJI jumped 192.98 points, or 1.22 percent, to end at 15,994.77. The Standard & Poor's 500 Index .SPX rose 19.91 points, or 1.11 percent, to finish at 1,819.75. The Nasdaq Composite Index .IXIC climbed 42.87 points, or 1.03 percent, to close at 4,191.05.
All three indexes scored a fourth straight gain, with the S&P 500 jumping about 4 percent over that period. The index also moved above its 50-day moving average for the first time since January 24, a positive sign of near-term momentum. The index has recovered much of its recent weakness, which took the index down as much as 6 percent from its record close on January 15.
Sprint Corp (S.N) rose 2.7 percent to end at $7.90 after the company reported quarterly revenue ahead of analysts' expectations and said it added wireless subscribers in the fourth quarter.
CVS Caremark Corp (CVS.N) shares climbed 2.7 percent to finish at $68.77 after the company posted higher quarterly profit as it processed more prescriptions.
Of the 357 companies in the S&P 500 that have reported earnings through Tuesday morning, 67.8 percent have beaten profit expectations, above the long-term average of 63 percent, according to Thomson Reuters data. Almost 66 percent have topped revenue forecasts, above the historical average of 61 percent.
On the downside, the shares of both Dean Foods Co (DF.N) and ConAgra Foods (CAG.N) fell after the companies gave weak outlooks. Dean Foods warned of a first-quarter loss while ConAgra cut its full-year outlook. Dean's stock slid 7.4 percent to $14.08 while ConAgra's stock lost 6.3 percent to $29.08.
After the market closed, shares of Fossil Group Inc (FOSL.O) rose 5 percent to $122.80 after the watch and accessories company reported fourth-quarter results, while TripAdvisor Inc (TRIP.O) shares rose 1 percent to $85 after the travel website company's results.
Infloblox Inc (BLOX.N) shares plunged 48.1 percent to $17.19 after the network equipment maker estimated second-quarter revenue below analysts' average forecast.
Cadence Pharmaceuticals Inc (CADX.O) surged 26.5 percent to $14 after the company agreed to be acquired by specialty pharmaceuticals company Mallinckrodt Plc (MNK.N) for about $1.3 billion. Mallinckrodt's stock climbed 11.6 percent to $66.19.
About 5.94 billion shares traded on all U.S. platforms, according to BATS exchange data.
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