By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks showed solid gains in
early-afternoon action Wednesday, recovering a little from a dip on
Federal Reserve Chairman Ben Bernanke saying tapering of the
central bank's bond buying could occur in the "next few
meetings."
The Dow Jones Industrial Average (DJI) rose 84 points, or 0.6%,
to 15,472. The blue-chip index had been up nearly 155 points, or
1%, but it then trimmed its gain to as few as 40 points at about 11
a.m. Eastern after Bernanke began responding to lawmakers'
questions.
The Standard & Poor's 500 Index (SPX) gained 9 points, or
0.5%, to 1,678. The Nasdaq Composite (RIXF) added 12 points, or
0.3%, to 3,514.
The Dow and S&P 500 are on pace to achieve record closes
again, while the Nasdaq is set to score a fresh multiyear high,
touching levels last seen in 2000.
Bernanke started testifying at 10 a.m. Eastern before the Joint
Economic Committee of Congress. He warned that premature tightening
in policy could strangle the economic recovery, sending the main
stock indexes to their session highs. Lawmakers then tried to nail
down when the Fed will taper its bond-buying program, with one
official asking if it could occur before Labor Day. Bernanke
responded by saying that the Fed could slow down its asset
purchases in its next few meetings. Stocks sold off on that
comment, but now have recovered somewhat. Bernanke wrapped up his
appearance before Congress about 11:50 a.m. Eastern. Read
MarketWatch's coverage of the Fed chief's testimony.
"The one and only thing at the moment is Mr. Bernanke's
presentation to Congress," said Mark Luschini, chief investment
strategist at Janney Montgomery Scott. "He indicated continued
leniency with regard to Fed policy given that economic conditions
aren't yet sturdy enough to support its withdrawal."
On Tuesday, two other Fed officials provided some soothing
commentary about sticking with the bond-buying program, helping to
lift stocks to record highs.
Just as Bernanke's testimony started, the National Association
of Realtors issued April data for existing-home sales. The rate was
4.97 million, roughly in line with expectations. Economists polled
by MarketWatch had expected a seasonally adjusted annual rate of 5
million.
Wednesday's other key news will include the 2 p.m. Eastern
release of minutes from the Federal Open Market Committee's April
30-May 1 meeting.
Treasurys reacted swiftly Wednesday to Bernanke's testimony,
with the 10-year yield rising above 2% for the first time since
March. His comments have also weighed on gold, sending gold futures
for delivery in June down about 0.6%.
Among S&P 500 sectors, healthcare and financials are
performing best Wednesday. Bristol-Myers Squibb (BMY) was a big
winner among health-care stocks, rising 7% on a bullish note from a
Citigroup analyst.
On the earnings front Wednesday, Lowe's Cos. (LOW) gained 1%.
The home-improvement retailer had been down in premarket trade
after it posted worse-than-expected quarterly results before the
opening bell, but encouraging comments from the company have
boosted the stock during the regular session.
While sales and profit disappointed after unseasonably cold
weather hurt demand for garden and other outdoor products, Lowe's
said sales have turned positive in April and May as the weather got
warmer. The company also expects a pick up in demand as the housing
market rebounds.
Target Corp. shares (TGT) lost ground, falling 4%, as the
big-box retailer's quarterly report disappointed as well. But home
builder Toll Brothers Inc. (TOL) advanced 7% as its revenue came in
well above forecasts.
.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires