Stocks hit new '11 highs on Fed's optimism about the recovery
4/27/2011NEW YORK — Stocks rose to another high for the year Wednesday after Federal Reserve Chairman Ben Bernanke said central bank officials expect the economy to continue recovering as the jobs market strengthens. An index of small stocks hit a record.
The Fed said it expects the economy to grow as much as 3.3 percent this year. That's below the Fed's previous forecast in January, but the Fed also said it's more optimistic about jobs. It now expects the unemployment rate to fall as low as 8.4 percent by the end of the year. The unemployment is currently at a two-year low of 8.8 percent.
Bernanke's comments came during his first news conference. He was speaking after Fed officials held a two-day policy meeting. The Fed also announced that its $600 billion bond-buying program would end as scheduled in June. The Fed repeated its promise to keep interest rates low for "an extended period."
The Dow Jones industrial average rose 95.59 points, or 0.8 percent, to close at 12,690.96. The Dow was already up before Bernanke's appearance and rose another 50 points after the Fed chairman spoke. The last time the Dow was this high was in May 2008.
The Standard&Poor's 500 rose 8.42, or 0.6 percent, to 1,355.66. That was its highest price since June 2008. The index is still 13 percent below the record high of 1,565 it reached in October 2007. The Nasdaq composite index rose 22.34, or 0.8 percent, to 2,869.88.
The Russell 2000 index, a benchmark for small stocks, surpassed its record high of 855.77 reached in July 2007. It closed up 5.27, or 0.6 percent, to 858.31. Small stocks have soared since the market's rally began because they're seen as having the best growth prospects as the economy recovers.