Stocks up after Yellen remarks; debt ceiling news
(Associated Press Via Acquire Media NewsEdge) NEW YORK (AP) — Stocks rose in midday trading Tuesday as the new head of the Federal Reserve, Janet Yellen, signaled that the central bank would continue to dial back its stimulus program if the U.S. economy keeps improving.
Investors also cheered news that Congress appeared poised to raise the United States' borrowing limit without the political drama that happened late last year. That would avert the threat of a default on the U.S. government's debt.
KEEPING SCORE: The Dow Jones industrial average rose 131 points, or 0.8 percent, to 15,935 as of noon Eastern time. The Standard & Poor's 500 index rose 13 points, or 0.8 percent, to 1,813 and the Nasdaq composite rose 23 points, or 0.6 percent, to 4,171.
CONTINUITY AT THE FED: In her first comments since taking over the top job at the Fed last week, Yellen told Congress Tuesday that she expects a "great deal of continuity" with her predecessor, Ben Bernanke. Yellen said she supports his view that the economy is strengthening enough to withstand a pullback in the Fed's stimulus, but that rates should stay low to fuel further growth. Last week the Fed announced it would reduce its bond purchases by $10 billion a month to $65 billion a month.
"She's being well received (by investors)," said Rob Stein, CEO of Astor Investment Management in Chicago.
DEBT CEILING: House Speaker John Boehner said that House Republicans would vote to raise the nation's borrowing limit without any conditions attached. Treasury Secretary Jack Lew, in a letter to Boehner last week, said the federal government would exhaust its ability to borrow by Feb. 27. Lew urged Congress to pass a debt ceiling bill as soon as possible. Investors were worried that more political wrangling over raising the borrowing limit could cause disruptions in financial markets, as happened in October 2013 and August 2011.
CVS RISES: Drugstore and pharmacy benefits company CVS Caremark rose $1.74, or 3 percent, to $68.69 after the company reported a 12 percent rise in fourth-quarter earnings, beating analysts' forecasts. CVS said last week it would stop selling tobacco products, which the company expects will cost about $2 billion in sales and will cut its earnings by 6 cents to 9 cents per share.
BARCLAYS CUTS: Barclays fell 67 cents, or 4 percent, to $17.54 after the British bank, citing a slowdown in its investment banking division, said it would slash up to 12,000 employees.
SPRINT: Wireless carrier Sprint posted a $1.04 billion loss, or 26 cents per share, compared with a loss of $1.32 billion, or 44 cents per share, in the same quarter the year before. However, the company said it added 477,000 wireless subscribers in the quarter and its loss was less than what analysts had expected. Sprint rose 28 cents, or 4 percent, to $7.96.
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