Stocks rose on Thursday, lifting the Dow and S&P 500 to their loftiest levels, as investors embraced signals sent by Janet Yellen that the Federal Reserve would continue its monetary stimulus.
"Everyone is focused on this Yellen hearing, clearly she is going to continue the policies in place. It's always nice to hear it reaffirmed," Peter Sidoti of Sidoti & Co., said of testimony by Yellen, who has been nominated to be the next chairman of the Fed.
A day after finishing at an all-time high, The Dow Jones Industrial Average rose another 54 points to 15,876.22, with Home Depot pacing gains that included 23 of its 30 components. Shares of Cisco Systems were slammed, with the Dow component off nearly 11 percent after it forecast a steep drop in revenue.
The S&P 500 also extended the prior day's record rise, with utilities the best performing and technology the sole sector declining among its 10 major industry groups. The Nasdaq also gained.
The Fed's stimulus policy of monthly bond purchases had buoyed markets in recent months and there had been concern it might slow down, or taper, its actions soon.
"Yellen's comments would lead the market to have less expectations of a December taper, which seemed to be building for a while, so that is offsetting some of the negative fundamentals," said Bill Stone, chief investment strategist at PNC Wealth Management in Philadelphia, referring to the revenue warning from Cisco.
"One could argue that a correction is in order, given the market's record-breaking advance. You could say we're overdue. But the opposite argument is it remains an extremely good environment for equities, with low inflation, high liquidity, low interest rates and an improving global economy to help earnings," said Stone.
During her nomination hearing in Washington, Yellen said: "I consider it imperative that we do what we can to promote a strong recovery." She told the Senate Banking Committee "it's important not to remove support, especially when the recovery is fragile and tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero."
On the New York Mercantile Exchange, gold futures rose $17.90, or 1.4 percent, to $1,286.30 an ounce; oil futures fell 12 cents, or 0.1 percent, to $93.76 a barrel.
Economic reports released Thursday had more Americans than estimated filing for jobless benefits, with applications dipping by 2,000 to 339,000 last week.
Separate data had worker productivity expanding less than expected in the third quarter and the trade deficit increasing more than forecast in September.
First published November 14 2013, 1:18 PM