U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a fourth day, as Federal Reserve Chairman Janet Yellen said the central bank will likely continue scaling back stimulus as the economy strengthens.
Sprint Corp. jumped 2.6 percent after posting fourth- quarter revenue that topped analysts’ estimates. CVS Caremark Corp. climbed 2.6 percent as pharmacy sales rose on new medicines and new customers. InvenSense Inc. rallied 11 percent after saying it has settled pending patent litigation proceedings with STMicroelectronics NV.
The S&P 500 gained 0.5 percent to 1,807.85 at 11:17 a.m. in New York. The Dow Jones Industrial Average rose 94.95 points, or 0.6 percent, to 15,896.74. Trading in S&P 500 stocks was 6.8 percent below the 30-day average during this time of the day.
“The market likes consistency and what we’ve heard this morning has been consistent with what we’ve heard for months,” Steven Rees, head of U.S. equities at JPMorgan Private Bank, which oversees $977 billion in assets, said in a phone interview. “Tapering continues, but it continues to be the result of an economic situation that’s slowly improving. The economy is still on track to have a good year.”
Yellen, 67, delivered her first public remarks as Fed chairman as policy makers pursue plans to gradually scale back the unprecedented bond-purchase program she helped put in place. She repeated the Fed’s outlook for further reductions in “measured steps” and that asset purchases, known as quantitative easing, are not on a “pre-set course.”
While growth has picked up, “the recovery in the labor market is far from complete,” Yellen said in remarks to the House Financial Services Committee. “I am committed to achieving both parts of our dual mandate: helping the economy return to full employment and returning inflation to 2 percent while ensuring that it does not run persistently above or below that level.”
Federal Open Market Committee officials have twice reduced the size of the monthly asset-purchase program, lowering bond buying to $65 billion in February from $85 billion last year. Three rounds of stimulus under previous Chairman Ben S. Bernanke have helped push the S&P 500 as much as 173 percent higher from a 12-year low in 2009.
“I think it’d be naive to someone to think she was going to go out on her own and do what she wants,” John Canally, an economic strategist at LPL Financial Corp. said in a phone interview from Boston. His firm oversees about $438.4 billion. “Yellen is just sticking to the script and she’s going to give it to the next FOMC meeting to taper.”
The S&P 500 rose 0.35 percent on Feb. 15, 2006, the day of Bernanke’s first report to Congress.
The S&P 500 last week posted its biggest weekly advance this year amid speculation that economic growth is robust enough to weather slower stimulus from the Fed even as data showed weaker-than-forecast hiring. The benchmark index has rallied 3.8 percent over the past six sessions, trimming its decline for the year to 2.2 percent.
The S&P 500 closed at a record on Jan. 15 and then dropped 5.8 percent through Feb. 3 amid signs of slowing growth in China and a rout in emerging-market currencies.
The central bank is studying employment and other economic data to determine when next to taper its stimulus measures. The Labor Department’s report on Feb. 7 showed payrolls rose by a less-than-projected 113,000 in January, while the unemployment rate dropped to the lowest level in more than five years.
Investors are also watching debt talks in Washington. The House plans to consider a debt limit bill without conditions tomorrow, according to Speaker John Boehner, who said that the burden will be on the Democrats to ensure passage of the measure. Democratic leader Nancy Pelosi said she told Boehner that Democrats “would vote for a clean” debt limit.
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