US stocks rise on stimulus hopes
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NEW YORK, Feb 22 AFP
February 23 2013, 10:19AM
US stocks closed higher on Friday on renewed confidence that the US Federal Reserve stimulus program will continue.
Stocks also got a lift from a bullish report on German business sentiment and from an earnings report from Dow member Hewlett-Packard, which surged 12.3 per cent higher.
The Dow Jones Industrial Average jumped 119.95 (0.86 per cent) to 14,000.57.
The broad-based S&P 500 gained 13.18 points (0.88 per cent) to reach 1,515.60, while the tech-rich Nasdaq Composite Index rose 30.33 points (0.97 per cent) to 3,161.82.
Speculation that the Federal Reserve would end its aggressive bond-buying program in 2013 had driven stock markets lower both Wednesday and Thursday.
But on Friday, more investors began to conclude that the market had "misinterpreted" Fed meeting minutes that discussed ending the program in 2013, said Peter Cardillo of Rockwell Global Capital.
Cardillo expected Federal Reserve Chairman Ben Bernanke to reaffirm the quantitative easing program in congressional testimony next week.
St Louis Federal Reserve President James Bullard told CNBC that the Fed's loose monetary policy would remain in effect for "a long time".
Analyst Patrick O'Hare of Briefing.com called Bullard's comments "an early buying catalyst".
Stocks also gained support after the German Ifo business climate index notched its strongest gain in two and a half years, hitting its highest level since April 2012.
With only a handful of exceptions, the blue-chip Dow index moved higher.
Besides Hewlett-Packard, big movers included Coca-Cola (up 2.2 per cent), American Express (up 1.7 per cent) and Home Depot (up 1.9 per cent).
Insurer American International Group late Thursday posted a $US4 billion ($A3.93 billion) loss, yet reported better-than-expected operating earnings. AIG rose 3.1 per cent.
Texas Instruments, a semiconductor company, picked up 5.2 per cent after announcing a 33 per cent increase in its dividend and $US5 billion ($A4.91 billion) in share buybacks.
Abercrombie & Fitch sank 4.5 per cent as the clothing retailer's tepid guidance for 2013 earnings offset an increase in the company's dividend.
Bond prices rose. The yield on the 10-year bond fell to 1.97 per cent from 1.98 per cent, while the 30-year fell to 3.16 per cent from 3.17 per cent. Bond prices and yields move inversely.