NEW YORK—U.S. stocks jumped on Monday, following Federal Reserve Chairman Ben Bernanke’s comments that he would work to keep interest rates low.
The Dow Jones Industrial Average gained 160 points, or 1.2 percent. The S&P 500 Index jumped 19 points, or 1.4 percent, while the Nasdaq Composite Index moved up 54 points, or 1.8 percent.
In a speech Monday at the National Association for Business Economics in Arlington, Va., Bernanke said that although he was encouraged by the 8.3 percent official jobless rate in the United States, a further drop in unemployment may not be sustainable. More job growth would require further business production and consumer spending, which “can be supported by continued accommodative policies,” he declared.
The chairman echoed the remarks he gave earlier this month, following a meeting of the Federal Open Markets Committee, that the unemployment rate remains high and that he planned to keep rates near zero until at least 2014 to help stimulate economic growth. For example, a sustained unemployment decline would need to be supported by GDP growths of at least 4 percent per annum. Last year, the U.S. economy expanded 2 percent.
Bernanke is tasked with balancing economic growth while keeping an eye on inflation. Roughly 1.2 million jobs were added over the last six months in the United States, which is the most since mid-2006. The 8.3 percent unemployment rate is the lowest since 2009.
While Bernanke said nothing groundbreaking, investors took it as an affirmation of the continuation of loose monetary policy.
Big Gainers
All S&P sectors were in the black on Monday, led by the health care and technology sectors.
The health care sector was largely boosted by news that the Supreme Court is currently hearing arguments to overhaul the health care reform law passed two years ago. While no decision is expected until midyear, investors are betting that the no changes will come from the hearings, which is a boost to companies in the health care sector.
Medical devices make Medtronic climbed 3.4 percent to $40 per share. Shares of hospital operator HCA Holdings jumped 1 percent.
Shares of Lions Gate Entertainment jumped 4.5 percent on Monday following a huge opening weekend for its post-apocalyptic film “The Hunger Games,” which pulled in $155 million after it opened Friday at midnight.
The technology sector also saw huge gains. Shares of online retailer Amazon.com Inc. jumped 4 percent to $202.87, while Chinese Internet company Baidu increased 4.5 percent.
Gold futures also surged, closing at more than $1,685 an ounce.
Friends Read Free