Stocks resume record rise as Yellen deflects thoughts of December taper

U.S. stocks rose on Thursday, with the Dow industrials and S&P 500 resuming their record advance, as investors embraced Janet Yellen’s signals that the Federal Reserve would continue its monetary stimulus.

“I consider it imperative that we do what we can to promote a strong recovery,” Yellen replied to a question during Thursday testimony before the Senate Banking Committee. “It’s important not to remove support, especially when the recovery is fragile and tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero.”

“Yellen’s comments would lead the market to have less expectations of a December taper, which seemed to be building for a while, so that is offsetting some of the negative fundamentals,” said Bill Stone, chief investment strategist at PNC Wealth management in Philadelphia, referring to the negative outlook from network-equipment maker Cisco Systems.

“The market seemed to be moving towards some probability of a December taper,” said Stone of the recent rise is yields, with Stone noting the 10-year Treasury going from less than 2.5 percent in late October to 2.79 percent in recent days. “We’re now back at 2.7 percent, so that’s why I think you can say Yellen is part of the deal here,” said Stone.

  Name Price   Change %Change
DJIA Dow Jones Industrial Average 15859.52
 
37.89 0.24%
S&P 500 S&P 500 Index 1787.95
 
5.95 0.33%
NASDAQ Nasdaq Composite Index 3962.18
 
-3.40 -0.09%

A day after finishing at an all-time high, The Dow Jones Industrial Averagegained, with Home Depot pacing gains that included 21 of its 30 components. Shares of Cisco were slammed, with the Dow components off 12 percent after it forecast a steep drop in revenue.

The S&P 500 also extended the prior day’s record rise, with health care the best performing and technology the sole sector declining among its 10 major industry groups.

The Nasdaq fluctuated.

For every five stocks falling, nine gained on the New York Stock Exchange, where 266 million shares traded at 12:30 p.m. Eastern. Composite volume neared 1.5 billion.

The yield on the 10-year Treasury note used in figuring mortgage rates and other consumer loans fell 3 basis points to 2.70 percent. The dollar edged higher against the currencies of major U.S. trading partners.

On the New York Mercantile Exchange, gold futures rose $20.00, or 1.6 percent, to $1,288.30 an ounce; oil futures rose 26 cents, or 0.3 percent, to $94.13 a barrel.

Wal-Mart Stores and Kohl’s declined after both retailers trimmed their outlooks.

After Wednesday’s close, prepared remarks for Yellen’s nomination hearing that began Thursday at 10 a.m. Eastern, with Yellen, Ben Bernanke’s likely replacement to head the Fed, saying the U.S. economy and jobs market must gain strength before the Fed can start cutting its monthly asset purchases.

Economic reports released Thursday had more Americans than estimated filing for jobless benefits, with applications dipping by 2,000 to 339,000 last week.

Separate data had worker productivity expanding less than expected in the third quarter and the trade deficit increasing more than forecast in September.

Also Thursday, President Barack Obama held a news conference on the Affordable Care Act, saying that individuals with insurance policies that are being canceled because they don’t meet the Affordable Care Act’s standards will be allowed to renew them.

—By CNBC’s Kate Gibson

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