Wall St gets a lift from Bernanke's flexible Fed view

Traders work on the floor at the New York Stock Exchange, July 17, 2013. United States (US) stocks ended modestly higher on Wednesday after Federal Reserve chairman Ben Bernanke said the timeline for winding down the US central bank's stimulus progra
Traders work on the floor at the New York Stock Exchange, July 17, 2013. United States (US) stocks ended modestly higher on Wednesday after Federal Reserve chairman Ben Bernanke said the timeline for winding down the US central bank's stimulus programme was not set in stone. -- FILE PHOTO: REUTERS

NEW YORK (REUTERS) - United States (US) stocks ended modestly higher on Wednesday after Federal Reserve chairman Ben Bernanke said the timeline for winding down the US central bank's stimulus programme was not set in stone.

Shares of Bank of America and Yahoo rose after the companies reported quarterly results. Both ranked among the names giving the biggest boost to the S&P 500.

The three major US stock indexes bounced back from Tuesday's lower close, which broke the S&P 500's eight-day string of gains.

Mr Bernanke said the US central bank still expects to start scaling back its massive bond-buying programme later this year, but he said the timeline depended on the economic outlook.

He made the comments on Wednesday before the House Financial Services Committee as part of his twice-yearly report to Congress on monetary policy. On Thursday, he will appear before the Senate Banking Committee.

"He's still being quite vague in describing exactly what to expect next, and I think that serves his purposes. He's trying to minimise the impact of policy change on the markets," said Mr Lawrence Creatura, portfolio manager at Federated Investors in Rochester, New York.

Mr Bernanke's comments on May 22 triggered a drop of nearly 6 per cent in the S&P 500 in the month that followed. But remarks from Mr Bernanke and other Fed officials since then have calmed the market and erased those declines. The S&P 500 is just several points away from the all-time intraday high of 1,687.18 it reached on May 22. For the year, the S&P 500 is up 17.9 per cent.

Yahoo shares shot up 10.3 per cent to close at US$29.66 (S$37.38).

Earlier, Yahoo hit an intraday high at US$29.73, its highest level since May 2008. Instead of Yahoo's bottom-line results, investors focused more on news of its stake in the fast-growing Chinese e-commerce firm Alibaba and its product development efforts.

The Dow Jones industrial average rose 18.67 points, or 0.12 per cent, to end at 15,470.52. The Standard & Poor's 500 Index gained 4.65 points, or 0.28 per cent, to finish at 1,680.91. The Nasdaq Composite Index advanced 11.50 points, or 0.32 per cent, to close at 3,610.00.

Bank of America shares gained 2.8 per cent to US$14.31, while BNY Mellon Corp shares rose 1.9 per cent at US$30.92. Both led the financial sector higher after the banks reported stronger-than-expected quarterly earnings.

The S&P financial sector index advanced 0.5 per cent.

"One reason investors might be encouraged by earnings is that management teams have done a great job of setting expectations, and right now, the bar is set at ankle height," Mr Creatura said. "So it should be reasonably easy for companies to beat expectations this quarter, and that could be a positive catalyst for markets."

Analysts expect S&P 500 companies' second-quarter earnings to have grown 3.3 per cent from a year earlier, with revenue up 1.2 per cent, Thomson Reuters data showed.

On the flip side, shares of American Express fell 1.9 per cent to US$76.80 after the European Commission said it would propose limits on fees that banks can charge to process debit-card and credit-card transactions. During the regular session, American Express was the Dow's biggest percentage decliner.

After the bell, American Express shares slid 1 percent to US$76 after the company reported results.

In other trading after the bell, shares of Intel fell 3.3 perUScent to US$23.35 after the world's biggest chipmaker cut its full-year revenue forecast and said it is scaling back capital spending.

Shares of eBay dropped 6.2 per cent to US$53.80 in extended-hours trading after the e-commerce company reported solid second-quarter results, but warned of "headwinds" in the second half of the year from Europe and Korea.

In contrast, shares of IBM rose almost 3 per cent in extended-hours trading after IBM raised its full-year earnings forecast and reported second-quarterly earnings that beat estimates. During the regular session, IBM's stock rose 0.4 per cent to end at US$194.55.

During the regular session, shares of DuPont jumped 5.3 per cent to US$57.25 after Trian Fund Management's Nelson Peltz said he has amassed a "big stake" in the chemicals maker. The stock was the Dow's top percentage gainer.

Part of the day's upbeat tone came from the Federal Reserve's Beige Book, which said the US economy continued to grow at a modest to moderate pace in June and early July, with manufacturing expanding in most areas of the country.

Volume was roughly 5.7 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, below the average daily closing volume of about 6.4 billion this year. On Monday, volume hit its lowest for any full trading day this year.

Advancers outpaced decliners on the NYSE by a ratio of nearly 2 to 1 in Wednesday's session. On the Nasdaq, about three stocks rose for every two that fell.