Dow, S&P 500 end at records after Yellen hearing; Cisco sinks
NEW YORK (Reuters) - The Dow and the S&P 500 index ended at new highs on Thursday after comments from Janet Yellen, the U.S. Federal Reserve Chair nominee, suggested the Fed's accommodative policies would continue as long as the economy remains fragile.
Gains in the technology-heavy Nasdaq and the Dow were held back by Cisco Systems (CSCO.O), however, after the networking giant reported disappointing results on Wednesday. Cisco shares fell as much as 13 percent on Thursday.
Yellen's Q&A followed late gains in the market Wednesday ahead of the release of her prepared remarks. In her testimony, Yellen said the Fed's current $85 billion in monthly bond purchases "cannot continue forever," but dismissed the notion current prices suggest bubble-like conditions.
"Her hearing confirmed the suspicion that she will be slightly more dovish Bernanke," said Joseph Tanious, Global Market Strategist at JPMorgan Funds.
"It reassured investors that they are unlikely to see any tapering announced this year."
The Dow Jones industrial average .DJI was up 54.59 points, or 0.35 percent, at 15,876.22. The Standard & Poor's 500 Index .SPX was up 8.62 points, or 0.48 percent, at 1,790.62. The Nasdaq Composite Index .IXIC was up 7.17 points, or 0.18 percent, at 3,972.74.
Since the beginning of the year, the S&P has gained about 25 percent and the Dow 21 percent, thanks in part to the Fed's massive bond-buying stimulus. The benchmark S&P 500 index is trading at about 16 times projected earnings.
Cisco shares posted their worst day since February 10, 2011, ending down nearly 11 percent at $21.37 after it warned its revenue would dive as much as 10 percent this quarter and keep contracting until after the middle of 2014.
"It caught people off guard," said Daniel Morgan, senior portfolio manager at Synovus Trust Company. "I think they're thinking that with Microsoft and other old-line technology companies doing well, that Cisco would come in and at least produce an average quarter."
Cisco's retreat weighed down the S&P 500 technology sector .SPLRCT, which fell 0.4 percent, but the other nine sectors were higher, boosted by confidence that Yellen will continue the Fed's current policies.
Shares of Kohl's Corp (KSS.N) fell 8.1 percent to $53.55 after the department store chain cut its full-year earnings forecast after reporting lower-than-expected quarterly results.
Houghton Mifflin (HMHC.O) shares rose 32 percent to $15.86 on the textbook publisher's first day of trading after emerging from bankruptcy last year.
Wal-Mart (WMT.N) shares rebounded after earlier losses, rising 0.2 percent to $79.08 after the bellwether reported lower-than-expected quarterly sales.
About 6.020 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, slightly below the five-day average closing volume of about 6.314 billion, according to BATS exchange data.
Advancers outnumbered decliners on the NYSE by 1,970 to 998 while decliners slightly beat advancers on the Nasdaq by 1,305 to 1,219.
(Reporting by Angela Moon; Editing by Nick Zieminski)
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