By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks posted tepid gains
Wednesday, with the S&P 500 poised for a ninth up session in 10
after Federal Reserve Chairman Ben Bernanke said the rate of bond
purchases is flexible.
Bernanke's comments reinforce "what we already know: that the
Fed is looking at the broad economy, which is showing signs of
improvement," said Terry Sandven, chief equities strategist at U.S.
Bank Wealth Management.
U.S. equities are in a holding pattern as the market digests
recent gains, with the pattern likely to persist for another couple
of weeks as "we await further guidance from companies and from the
Fed," said Sandven, who added that investors will likely learn more
about the "timing of the tapering," or reduced Fed asset purchases,
at the next Federal Open Market Committee meeting at the end of the
month.
The Dow Jones Industrial Average (DJI) added 8.21 points, or
0.1%, to 15, 460.06, with Bank of America Corp. (BAC) leading
blue-chip gains, its shares up 2.6% after the bank said
second-quarter profit jumped 63%, beating analyst estimates.
Dow component American Express Co. (AXP) fell 1.8% after the
Financial Times cited a draft plan in reporting the European
Commission had proposed the introduction of a 0.2% cap on
debit-and-credit-card transaction fees.
"The stock market has had a bit of a run here, so we may need to
do some trading in a range given the strong gains we had in the
spring," said Bruce McCain, chief investment strategist at Key
Private Bank.
"A lot of investors are focusing money on the United States, but
if we don't get some help from overseas markets, it'll be hard to
meet or beat growth estimates for U.S. firms as well," said
McCain.
"A lot of what is going on in emerging markets over the course
of the second quarter is reflected in a general slowdown," said
McCain, who adds some have the mistaken notion that the United
States is going to diverge from the path that other global
economies are on. "It doesn't seem like we're taking a different
boat, if they sink so do we."
Shares of Dell Inc. (DELL) fell 0.8% ahead of a Thursday
shareholder vote on a bid by founder and CEO Michael Dell to take
the PC maker private.
Intel Corp. (INTC) lost 0.6% ahead of the chip maker's quarterly
results, due to be released after Wednesday's close.
Yahoo Inc. (YHOO) gained 9.5% after the technology company
reported earnings that exceeded estimates.
Mattel Inc. (MAT) fell 6.9% after the toy maker reported much
weaker-than-expected quarterly results.
Also due to report quarterly results after the market close on
Wednesday are EBay Inc. (EBAY), American Express and International
Business Machines Corp (IBM).
The S&P 500 index (SPX) rose 3.37 points, or 0.2%, to
1,679.63, with materials pacing sector gains and utilities the
largest laggard.
The Nasdaq Composite (RIXF) gained 4.71 points, or 0.1%, to
3,603.19.
For every stock falling, almost two gained on the New York Stock
Exchange, where 401 million shares traded as of 3 p.m. Eastern.
Composite volume neared 2.4 billion.
In testimony on Capitol Hill, Bernanke said the Fed's $85
billion in monthly bond buys are "by no means on a preset course"
and can be curbed further or extended, depending on the economic
climate. The central bank's stimulus program is meant to keep
interest rates down and encourage borrowing.
"The short-term market participants are reading Bernanke's
comments dovishly," emailed Marc Chandler, global head of currency
strategy at Brown Brothers Harriman.
Stocks mostly stayed in positive terrain as Bernanke answered
questions from members of the House Financial Services Committee,
and then as the Fed's so-called Beige Book found the economy
continued to grow at a "modest to moderate" pace.
"Most are resigned to the fact that quantitative easing is going
away, so we need to see a transition to enthusiasm about the
economy and earnings growth," said McCain at Key Private Bank.
Construction on new homes fell in June, the government said.
Crude futures (CLQ3) added 48 cents, or 0.5%, to $106.48 a
barrel and gold prices (GCQ3) fell 12.90, or 1%, to end at
$1,277.50 an ounce in New York.
The dollar (DXY) gained against the currencies of major U.S.
trading partners, including the yen (USDJPY).
Treasury yields declined, with the 10-year note (10_YEAR) lately
at 2.491%.
On Tuesday, U.S. stocks fell, bringing a halt to an
eight-session winning streak for the S&P 500, after a Federal
Reserve member urged reduced stimulus and Coca-Cola Co.'s (KO)
profit fell.
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