NEW YORK: Wall Street rose for a fourth straight session on Tuesday as Congress agreed to advance legislation extending US borrowing authority and the Federal Reserve's new chief held off from making any changes to its schedule for trimming stimulus.
The gains were broad, with all 10 SandP 500 sectors up for the day and about 75 per cent of New York Stock Exchange-traded stocks ending higher. About 67 per cent of Nasdaq-listed shares closed in positive territory, while the SandP 500 ended just 1.6 per cent away from its record closing high.
Republican leaders in the US House of Representatives caved in to demands by President Barack Obama and agreed to advance legislation increasing Washington's borrowing authority, removing a potential market headwind.
Fed Chair Janet Yellen emphasized continuity in the US central bank's policy strategy of cutting asset purchases by US$10 billion a month, saying she strongly supports the approach of her predecessor, Ben Bernanke. In her first public comments as Fed chief, Yellen also said that while the US unemployment rate has fallen recently, labor market conditions needed to improve further.
"No one was really expecting a major debt ceiling showdown or changes in tapering, but anticipation is one thing, and the experience is another," said John Carey, portfolio manager at Pioneer Investment Management in Boston. "Everyone is more relaxed now that those issues are officially off the table."
The Fed's policies have been credited with driving the market's steep gains in 2013, and those accommodative measures are expected to keep a floor under stock prices for as long as they continue. However, had the pace of ending the program been slowed, it may have raised concerns that the economy was still not strong enough to grow on its own.
The Dow Jones industrial average jumped 192.98 points, or 1.22 per cent, to end at 15,994.77. The Standard and Poor's 500 Index rose 19.91 points, or 1.11 per cent, to finish at 1,819.75. The Nasdaq Composite Index climbed 42.87 points, or 1.03 per cent, to close at 4,191.05.
All three indexes scored a fourth straight gain, with the SandP 500 jumping about four per cent over that period. The index also moved above its 50-day moving average for the first time since January 24, a positive sign of near-term momentum. The index has recovered much of its recent weakness, which took the index down as much as six per cent from its record close on January 15.
Sprint Corp rose 2.7 per cent to end at US$7.90 after the company reported quarterly revenue ahead of analysts' expectations and said it added wireless subscribers in the fourth quarter.
CVS Caremark Corp shares climbed 2.7 per cent to finish at US$68.77 after the company posted higher quarterly profit as it processed more prescriptions.
Of the 357 companies in the SandP 500 that have reported earnings through Tuesday morning, 67.8 per cent have beaten profit expectations, above the long-term average of 63 per cent, according to Thomson Reuters data. Almost 66 per cent have topped revenue forecasts, above the historical average of 61 per cent.
On the downside, the shares of both Dean Foods Co and ConAgra Foods fell after the companies gave weak outlooks. Dean Foods warned of a first-quarter loss while ConAgra cut its full-year outlook. Dean's stock slid 7.4 per cent to US$14.08 while ConAgra's stock lost 6.3 per cent to US$29.08.
After the market closed, shares of Fossil Group Inc rose five per cent to US$122.80 after the watch and accessories company reported fourth-quarter results, while TripAdvisor Inc shares rose one per cent to US$85 after the travel website company's results.
Infloblox Inc shares plunged 48.1 per cent to US$17.19 after the network equipment maker estimated second-quarter revenue below analysts' average forecast.
Cadence Pharmaceuticals Inc surged 26.5 per cent to US$14 after the company agreed to be acquired by specialty pharmaceuticals company Mallinckrodt Plc for about US$1.3 billion.
Mallinckrodt's stock climbed 11.6 per cent to US$66.19.
About 5.94 billion shares traded on all US platforms, according to BATS exchange data.-- Reuters