* 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 (Reuters) - 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 Desert, California.
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 annual rate.
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 at 3,376.22.
The CBOE Volatility Index or VIX, Wall Street’s favorite barometer of investor anxiety, fell 6.8 percent to 17.21.
Volume was about average, with 6.48 billion shares traded on American exchanges.
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.