help lift indexes
NEW YORK >> Stocks bounded higher yesterday as bullish congressional testimony from Alan Greenspan and anticipation for a strong midquarter update from Intel Corp. brightened Wall Street's mood and overshadowed a surge in oil prices.
The Federal Reserve chairman told lawmakers the economy seems to be on "reasonably firm footing," with inflation under control. His generally positive assessment supports the view that the Fed, which has raised interest rates eight times over the past year, will likely continue nudging rates higher at a gradual pace. Fed policy-makers are widely expected to raise the federal funds rate by another quarter-point to 3.25 percent at their next meeting, set for June 29-30.
"Once everyone sifted through all the comments, the realization was that he hasn't changed his thoughts about the economy," said Peter Cardillo, chief strategist at S.W. Bach & Co. in New York. "He doesn't think the economy is ready to fall off a cliff, and that's basically a strong fundamental for the stock market."
The Dow Jones industrial average rose 26.16, or 0.2 percent, to 10,503.02, after spending the first part of the session in negative territory.
The broader gauges also closed higher. The Standard & Poor's 500 index was up 6.26, or 0.52 percent, at 1,200.93. The Nasdaq composite index added 16.73, or 0.8 percent, to 2,076.91.
Greenspan's remarks had some analysts speculating that the Fed would likely continue raising short-term rates through the third quarter, perhaps to the 4 percent level. With the rate cycle's end in sight, stock investors can look forward to more stability, said Hans F. Olsen, chief investment officer at Bingham Legg Advisers, a private wealth management firm in Boston.
"You can start to see the end is near ... The interest rate increase regime is coming to a close, and that is an unambiguous positive development for equities," Olsen said. "For the balance of the year, I think that sets us up for a good second half."
In company news, Intel boosted its second-quarter revenue forecast on better-than-expected demand for its notebook computer chips, a sign that the semiconductor industry is gaining strength after a downturn last year. The Dow component expects sales to be between $9.1 billion and $9.3 billion for the period ending July 2, at the upper end of the $8.6 billion to $9.2 billion range it forecast in April. Analysts, on average, are expecting sales of about $8.99 billion, according to a survey by Thomson Financial.