Positive Reaction To Yellen's Testimony Pushes Stocks Higher - U.S. Commentary

(RTTNews) - After turning higher over the course of the previous session, stocks saw some further upside during trading on Thursday. With the upward move on the day, the Dow and the S&P 500 once again reached new record highs.

The major averages pulled back off their highs going into the close but remained in positive territory. The Dow rose 54.59 points or 0.4 percent to 15,876.22, the Nasdaq edged up 7.16 points or 0.2 percent to 3,972.74 and the S&P 500 climbed 8.62 points or 0.5 percent to 1,790.62.

The strength that emerged on Wall Street partly reflected a positive reaction to Janet Yellen's testimony at her confirmation hearing before the Senate Banking Committee.

Yellen, the nominee to succeed Federal Reserve Chairman Ben Bernanke, defended the ultra-easy monetary policy that has seen the Fed's balance sheet more than quadruple since 2008 to nearly $4 trillion.

"Under the wise and skillful leadership of Chairman Bernanke, the Fed helped stabilize the financial system, arrest the steep fall in the economy, and restart growth," Yellen told the committee.

She added, "We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession."

Yellen argued that unemployment remains too high for the Fed to consider significantly scaling back its $85 billion a month in asset purchases.

"I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy," Yellen said.

The remarks from Yellen offset the negative sentiment generated by a sharp drop by shares of Cisco (CSCO), which plunged by 11 percent.

The steep loss by Cisco came after the networking giant reported better than expected first quarter earnings but forecast full-year earnings below analyst estimates.

Meanwhile, traders largely shrugged off the mixed batch of economic data that was released before the start of trading.

Sector News

Gold stocks showed a substantial move to the upside over the course of the trading day, driving the NYSE Arca Gold Bugs Index up by 2.7 percent. With the gain, the index climbed further off Tuesday's nearly one-month closing low.

A significant increase by the price of gold contributed to the strength in the sector, with gold for December delivery climbing $17.90 to $1,286.30 an ounce.

Considerable strength also emerged among housing stocks, as reflected by the 1.9 percent gain posted by the Philadelphia Housing Sector Index. Ryland Group (RYL) and PulteGroup (PHM) turned in two of the housing sector's best performances.

Utilities, commercial real estate, and chemical stocks also saw some strength on the day, although buying interest was relatively subdued.

Meanwhile, networking stocks came under pressure on the day, with Cisco helping to lead the way lower. The NYSE Arca Networking Index tumbled by 2.3 percent after ending the previous session at its best closing level in almost a month.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a strong performance during trading on Thursday. Japan's Nikkei 225 Index surged up by 2.1 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.5 percent, the French CAC 40 Index and the German DAX Index jumped by 1 percent and 1.1 percent, respectively.

In the bond market, treasuries saw some volatility over the course of the session before closing modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.3 basis points to 2.702 percent.

Looking Ahead

While traders largely shrugged off today's mixed batch of economic data, trading on Friday may be impacted by the release of reports on import and export prices, industrial production, and New York manufacturing activity.

On the earnings front, Agilent (A), Applied Materials (AMAT), and Nordstrom (JWN) are among the companies releasing their quarterly results after the close of today's trading.