NEW YORK (Aug 24): The benchmark S&P 500 and the Nasdaq hit all-time highs on Friday after Federal Reserve Chair Jerome Powell said the central bank's current approach to interest rate hikes were the best way to protect the US economic recovery.
Gradual rake hikes are also the best way to keep job growth as strong as possible and inflation under control, Powell said. His comments did little to change market expectations of a rate hike in September and perhaps again in December.
"The Fed is very confident in the US economy, and Powell is indicating the Fed has no intention of slowing down rate hikes and it appears they are going to be looking past trade concerns for now," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte.
"We are seeing some of the more cyclical sectors like energy and materials continuing to move higher on the expectation that the Fed is going to let the economy run a little hot."
A dip in the dollar after Powell's comments helped lift oil and metal prices. The energy sector jumped 1.27 percent, the most among the 11 S&P sectors. The materials sector gained 1.1 percent.
The KBW bank index rose 0.12 percent, less than the broader S&P financials index's 0.28 percent increase.
Economic data also boosted sentiment. New orders for key U.S.-made capital goods increased more than expected in July and shipments growth held firm, the Commerce Department said.
At 11:13 a.m. EDT the Dow Jones Industrial Average was up 121.78 points, or 0.47 percent, at 25,778.76, the S&P 500 was up 14.87 points, or 0.52 percent, at 2,871.85 and the Nasdaq Composite was up 63.60 points, or 0.81 percent, at 7,942.05.
If the S&P ends the session above its Jan 26 record close, that would confirm the benchmark index's longest-ever bull-market run.
Only two of the 11 major sectors were lower. The rate-sensitive utilities sector fell 0.16 percent and the consumer staples index 0.20 percent.
Staples were hit by Philip Morris's 3.3 percent drop and Altria's 2 percent drop after brokerage Jefferies flagged concerns that the two tobacco companies could lose market share.
Netflix rose 3.6 percent after SunTrust Robinson Humphrey upgraded the stock to "buy," saying current-quarter subscriber growth was solidly in line or ahead of estimates.
Autodesk leaped 14.7 percent, the most on the S&P, after the software maker's quarterly results beat estimates.
Gap Inc sank 11.8 percent and Foot Locker tumbled 11.7 percent after the retailers posted disappointing same-store sales.
Advancing issues outnumbered decliners by a 2.22-to-1 ratio on the NYSE and a 2.02-to-1 ratio on the Nasdaq.
The S&P index recorded 30 new 52-week highs and three new lows, while the Nasdaq recorded 122 new highs and 21 new lows.