U.S. stocks jumped, sending the Standard & Poor’s 500 Index above its record closing level, after Federal Reserve Chairman Ben S. Bernanke backed sustained stimulus.
The S&P 500 gained 1.1 percent to 1,670.30 at 9:36 a.m. in New York, topping a record close of 1,669.16 reached on May 21. The benchmark gauge is up 17 percent for the year.
“The Fed is emphasizing that policy is going to remain accommodative in the near term,” Tim Gibbens, an investment manager at Alliance Trust Plc, said by phone from Dundee, Scotland. “It’s a highly flexible and data-dependent stance which can mean that bond purchases won’t necessarily stop this year. They’re trying to manage market expectations after being surprised at the reaction after May.”
Bernanke spoke after the release of minutes from the central bank’s June 18-19 meeting showed about half of the 19 participants in the Federal Open Market Committee wanted to halt the $85 billion in monthly bond purchases by the end of this year. The minutes also showed many Fed officials wanted to see more signs that employment is improving before agreeing to trim the asset-buying program known as quantitative easing.
The minutes were released during regular market hours yesterday, and U.S. equities ended the day little changed. After the close of trading, Bernanke said low inflation and high unemployment mean the Fed needs to continue with its stimulus measures.
“Highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy,” Bernanke said in response to a question after a speech in Cambridge, Massachusetts.
The number of Americans filing for unemployment benefits unexpectedly increased to a two-month high. First-time claims rose by 16,000 to 360,000 in the week ended July 6 from a revised 344,000, Labor Department figures showed today. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 340,000. Claims are difficult to adjust in July for seasonal events such as vehicle plant shutdowns and the Independence Day holiday, a Labor Department spokesman said.
— Bloomberg News —