* S&P 500 above 1,600 for first time since last Thursday
* Adobe and Microsoft rise on analysts' upgrades
* Dow up 1 pct, S&P 500 up 1 pct, Nasdaq up 0.9 pct
By Alison Griswold
NEW YORK, June 26 U.S. stocks rallied for a
second day on Wednesday, recouping some recent losses on reduced
concern that the Federal Reserve will begin to withdraw its
stimulus in the near future.
The broad-based advance lifted the S&P 500 above the 1,600
threshold for the first time since last Thursday. Stocks have
recently sold off after the Fed said it is moving closer to
reducing its monthly bond-buying efforts, but the last two days
of buying show some believe the market has overreacted.
A1l 10 of the S&P 500 industry sectors gained, with the
healthcare and utilities sectors leading the way. Johnson &
Johnson was the S&P 500's second-biggest mover. The
healthcare company's stock rose 1.9 percent to $86.99.
"The market is broadly being traded up today, and I think
there are a lot of people out there that are trying to put cash
to work and get out of fixed income," said Brian Amidei,
managing director and partner at HighTower Palm Desert in Palm
The rally followed data showing the U.S. economy grew at an
annual rate of 1.8 percent in the first quarter, well below
expectations for gross domestic product to grow at a 2.4 percent
While the GDP data looks backward and includes the start of
cutbacks in federal spending, analysts said it could influence
the Fed's considerations of whether the economy is strong enough
for it to begin scaling back its $85 billion a month in bond
purchases. Should this contribute to keeping the Fed from moving
sooner, it would be seen as supportive for stocks.
Stocks have been closely tied to the central bank's easy
money policy, with the Dow and the S&P 500 hitting a series of
record closing highs as investors bet that the bond buying would
remain in place, and then dropping dramatically on hints that
the stimulus could be reduced before the end of the year.
U.S. Treasury bond prices rose, causing bond yields to fall.
Lower bond yields enhance the appeal of equities.
The Dow Jones industrial average rose 149.83 points
or 1.02 percent, to end at 14,910.14. The S&P 500 gained
15.23 points or 0.96 percent, to finish at 1,603.26. The Nasdaq
Composite added 28.34 points or 0.85 percent, to close
The CBOE Volatility Index or VIX, Wall Street's
favorite barometer of investor anxiety, fell 6.8 percent to
Volume was about average, with 6.48 billion shares traded on
The S&P 500 gained 1.9 percent over the past two sessions,
its best two-day rally in three weeks following a massive
selloff. Last week, the S&P 500 index posted its worst week
since April. The benchmark index remains 4 percent below its
all-time closing high of 1,669.16 reached on May 21.
Tech companies' shares advanced following bullish comments
from analysts. Adobe Systems Inc rose 3 percent to
$45.68 after Jefferies & Co upgraded the stock to "buy" from
"hold," citing expectations for more new users. Microsoft Corp
climbed 2 percent to $34.35 after Morgan Stanley raised
its rating to "overweight" and increased its price target on the
stock to $40.
On the downside, gold stocks slid as the precious metal fell
to its lowest in almost three years, putting it on course for a
record quarterly loss.
U.S.-listed shares of Gold Fields Ltd dropped 7.5
percent to $4.70 and Barrick Gold Corp fell 8.3 percent
to $14.78. Newmont Mining was one of the S&P 500's
biggest decliners, sliding 5.9 percent to $27.22.
Apollo Group, owner of the University of Phoenix,
was the S&P 500's biggest decliner, sinking 10.2 percent to
$17.39 a day after reporting its third-quarter results.