Stocks surge after Bernanke allays stimulus fear

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NEW YORK (AP) — Call it “the Bernanke Boost.”

The stock market, which has been marching higher for a week, got extra fuel Thursday after the Federal Reserve Chairman Ben S. Bernanke said the central bank will keep supporting the economy.

The Dow Jones industrial average and Standard & Poor’s 500 surged past all-time highs. Gold rose. And the yield on the 10-year Treasury note continued to decline as investors bought bonds. Stocks that benefit most from a continuation of ultralow interest rates, such as homebuilders, notched some of the biggest gains.

The chairman made the comments in a speech late Wednesday after U.S. markets had closed, saying the economy still needs “a highly accommodative monetary policy for the foreseeable future.”

He said the U.S. economy needs help because unemployment is high. The remarks seemed to ease investors’ fears that the central bank will pull back on its economic stimulus too quickly.

Stock index futures rose overnight, and the market surged at the open Thursday.

“It’s back to the old accommodative Fed, so the markets are happy again,” said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research.

The S&P 500 index jumped as high as 1,675, above its record close of 1,669 on May 21. The index was up 20 points, or 1.2 percent, at 1,673 as of 3:11 p.m. EDT.

The index is on track for its sixth straight day of gains, its longest streak in four months.

The Dow rose 154 points, or 1 percent, to 15,445, above its own all-time closing high of 15,409 on May 28.

The Nasdaq composite rose 52 points, or 1.2 percent, to 3,572. The Nasdaq is at its highest since October 2000. It remains well below the all-time high of 5,048 it reached on March 10, 2000.

In government bond trading, the yield on the 10-year note fell to 2.58 percent from 2.63 percent Wednesday. The yield has dropped this week. It surged as high as 2.74 percent Friday after the government reported strong hiring in June. Many traders took that report as a signal that the Fed would be more likely to slow its bond purchases sooner rather than later.

The Fed is currently buying $85 billion a month in bonds to keep interest rates low and to encourage spending and hiring.

Among individual companies in the S&P 500, Advanced Micro Devices rose the most after news that it the company is making chips for two big gaming devices. Homebuilders, which are very sensitive to the outlook for interest rates, followed.

D.R. Horton rose $1.84, or 8.7 percent, to $22.89, and Lennar Group climbed $2.93, or 8.5 percent, to $37.49.

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