Stocks rallied on Wednesday after Fed Chairman Ben Bernanke appeared before the House Financial Services Committee to give testimony about the status of the central bank’s asset-purchasing program.
The Chairman reiterated the Fed’s desire to begin “tapering” the $85 billion per-month quantitative easing program, but also reiterated that any such pull-back would ultimately be tied to economic conditions.
The Standard & Poor’s 500 rose 0.28 percent to 1,680.91, while the Dow Jones Industrial Average was up 0.12 percent to 15,470.52, while the NASDAQ jumped 0.32 percent to end the day at 3,610.
Stocks took comfort in Bernanke’s testimony, even as Commerce Department data was released early in the day indicating that new home construction for the month of June unexpectedly dropped nearly 10 percent from previous month, the largest decrease since August 2012.
Bank Of America closed 2.8 percent higher to $14.31 after the company’s earnings report showed the bank beating earnings-per-share expectations by $0.07 at $0.32 per share. PNC Financial Services ($PNC) and US Bancorp ($USB) also reported earnings beats on Wednesday, but their stocks ended the day lower due to unimpressive revenue growth.
Construction machinery company Caterpillar (CAT) closed the day down 1.7 percent to $86.67 after veteran short-seller Jim Chanos announced that he would be taking a short position on the company’s stock. Chanos cited what he believed to be problematic accounting practices, as well as Caterpillar’s dependence on mining operations for revenue that will likely take a hit from continued slower growth out of China.
Yahoo! (YHOO) soared over 10 percent to close just shy of $30 after the company's earnings report release gave investors confidence that Marissa Mayer's turnaround strategy is steadily improving once dominant firm's outlook for the future.