Dow and S&P 500 Close On Record Highs as Federal Reserve Reiterates Monetary Policy

Michael Teague  |

Stocks rallied on Tuesday ahead of Ben Bernanke’s appearance before congress, along with the release of the minutes from the last FOMC meeting, as New York and St. Louis Federal Reserve presidents reassured markets about the Fed’s quantitative easing program.

St. Louis Fed President James Bullard, who has been more openly skeptical than some of his colleagues regarding the Fed’s bond-buying program, spoke about monetary policy before an audience at the House of Finance at the Goethe University in Frankfurt, Germany, recommended that the central bank should stay on course with its purchases in accordance with the inflation and employment targets it has reiterated on numerous occasions.

As Japan transitions wholeheartedly to a stimulus policy very similar to the one that has been adopted by the Fed, William Dudley, President of the Federal Reserve Bank of New York, appeared before the Japan Society in Manhattan, saying much the same thing as his Midwestern colleague. Dudley’s comments dispelled fears about impending and abrupt reductions to QE, as he reiterated that any drawdown in spending would be heavily contingent upon “the significant fiscal drag currently in force.”

The news propelled the Dow to a new all-time high of 15,387.58 points by the closing bell, an advance of 0.34 percent. The biggest gain on the index was posted by pharmaceutical company Merck & Co. (MRK), up 4.76 percent to $47.36, followed by Home Depot Inc. (HD) with an advance of 2.54 percent to $78.71. Shares for the home improvement retailer were propelled by the company’s impressive earnings report that squashed consensus expectations, as well as an upward revision of guidance for the rest of the fiscal year.

JPMorgan Chase (JPM) was in tow, up 1.40 percent to end the day at $53.02 per share. The financial institution’s CEO and Chairman Jamie Dimon easily survived a shareholder vote that would have removed him from one of his roles at the head of the company. The nation’s second-largest bank has come under increasing pressure to split Dimon’s position after a series of highly publicized scandals involving untoward dealings with investors and federal regulators, as well as risky trading practices.

The S&P 500 was up 0.17 percent to 1,669.16 by the close, also another new high, led by medical appliance company Medtronic Inc. (MDT), who jumped almost 5 percent to $52.35 on the strength of the earnings report it released early in the day indicating the company’s net income for the first quarter was well ahead of expectations. An earnings beat also sent shares for auto parts retailer AutoZone Inc. (AZO) up 4.59 percent to $427.84 by closing.

Sprint Nextel Corp. (S) gained 1.37 percent to close at $7.39 amid continuing bidding maneuvers between Japanese wireless firm SoftBank and Dish Network (DISH) for the nation’s 3rd largest wireless carrier.

Shares for Best Buy Co. (BBY) tanked 4.36 percent to $25.64 as the company reported a net loss for the first quarter, while Urban Outfitters Inc. (URBN) slipped 2.75 percent to close at $43.27 after the trendy apparel retailer saw sales come in behind expectations.

The Nasdaq closed up 0.16 percent to 3,502.12 points, with wireless provider Clearwire (CLWR) up 4.29 percent to $3.40 as internal disagreements over how to respond to Sprint’s buyout offer pushed a shareholder decision on the matter to Wednesday. Meanwhile Yahoo! Inc. (YHOO) gained 1.58 percent to close at $27 per share, as investors continue to respond favorably to Monday’s acquisition of blogging and social networking site Tumblr.

Apple (AAPL) shed 0.75 percent to $439.66 as the company’s CEO Tim Cook appeared at a senate hearing to defend his company’s tax policy, and Tesla Motors (TSLA) was down 2.61 percent to $87.59 after CEO Elon Musk announced that the company would likely finish repaying its government loans during the week.

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