Stocks turned higher Wednesday after Federal Reserve Chairman Ben Bernanke said central bank officials expect a moderate economic recovery to continue through this year as the jobs market strengthens.
The Fed expects the economy to grow between 3.1 percent and 3.3 percent this year. That's below the Fed's previous forecast in January, but the Fed also said it's more optimistic about jobs. The Fed now expects the unemployment rate to fall between 8.4 percent and 8.7 percent by the end of the year. Unemployment is currently at a two-year low of 8.8 percent.
Bernanke's comments came during his first news conference on the economy. He was speaking after Fed officials held a two-day policy meeting. The Fed also announced that its $600 billion bond-buying program would end as scheduled in June. The Fed repeated its promise to keep interest rates low for "an extended period."
The Dow Jones industrial average rose 105 points, or 0.8 percent, to 12,701 in afternoon trading. The Dow was already up before Bernanke's appearance and rose another 60 after the Fed chairman spoke.
The Standard & Poor's 500 rose 9, or 0.7 percent, to 1,356. The Nasdaq composite index rose 19, or 0.7 percent, to 2,867
Gold prices rose after the Fed said it would keep interest rates near zero in order to stimulate the economy. That led traders to buy gold as a hedge against inflation and a weaker dollar, both of which can result from low interest rates. Gold for June delivery rose $13.60 to settle at $1,517.10 an ounce.
Bond prices were relatively unchanged after Bernanke's news conference. The yield on the 10-year Treasury note rose to 3.35 percent from 3.32 percent late Tuesday.
Earnings results were mixed. Boeing Co. rose less than 1 percent after reporting earnings that beat analyst expectations. The airplane maker and defense contractor also said it still expects to deliver its long-delayed 787 aircraft in the third quarter.
DeVry Inc. rose 8 percent. The for-profit education company reported that its earnings rose 18 percent as its revenue rose.
Broadcom Corp. fell 12 percent a day after the chipmaker issued a second-quarter revenue outlook that was below analyst estimates.
Specialty glassmaker Corning Inc. rose 3 percent after the company's revenue surged on strong sales of glass for flat-screen televisions, computers and mobile devices.
Johnson & Johnson fell less than 1 percent after the health giant said it would buy medical devicemaker Synthes Inc. for $21.3 billion in one of the largest deals in the company's history.
Investors were encouraged after the Commerce Department reported that businesses increased their orders for long-lasting manufactured goods by 2.5 percent in March, a bigger increase than economists had predicted.
"The manufacturing sector remains the real bright spot of the economy," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.
Stocks reached their highest level in nearly three years Tuesday on strong earnings results from major companies including Ford Motor Co. and Cummins Inc.
The S&P 500 reached its highest level since June 2008, while the Dow hit another high for the year. The Russell 2000 index, the benchmark for small-cap stocks, came close to its record high of 855.77 reached in July 2007.
Small-cap stocks have soared since the market's rally began because they're seen as having the best growth prospects as the economy recovers. The Russell 2000 gave up some of its gains on Wednesday, falling 1 point, or 0.1 percent, to 851.99.