DOW climbing to new multi-year highs

Dow

12,690.96

+95.59

+0.76%

By: Abby Schultz, JeeYeon Park

Stocks ended sharply up, climbing to new multi-year highs after Federal Reserve Chairman Ben Bernanke spoke to the press on Wednesday.

The Dow Jones Industrial Average rose 95.59 points, or 0.8 percent, to close at 12,690.96, the highest close for the blue-chip index since May 20, 2008.


The S&P 500 rose 8.42 points, or 0.6 percent, to close at 1,355.66, the highest close for the broad-market index since June 16, 2008.


The Nasdaq rose 22.34 points, or 0.8 percent, to close at 2,869.88, the highest close for the tech-heavy index since Dec. 12, 2000.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to nearly 15.

The markets added to gains as Bernanke responded to questions, probably because "there's no curve ball," said Jeremy Zirin, chief U.S. equity strategist at UBS Wealth Management.


"This is brand new territory," Zirin said, and the markets had some anxiety Bernanke would say something that would throw the markets off course.

Also, Zirin said, "I think Bernanke has done a very, very good job of explaining in layman's terms the process the Fed goes through in establishing policy. To some degree, they are giving Bernanke a thumbs up."

The press conference also illuminated what the Fed means when it says it plans to keep rates low for an "extended period." In response to a question, Bernanke said, "it's a couple of meetings," which means a minimum of about three months, Zirin said.

"The market hates uncertainty, and now there’s one less bit of uncertainty," he said.

Zirin said Bernanke also did a good job of explaining that the inflection point of when the Fed will begin tightening — and when investors will begin shying away from riskier assets — is not happening soon, "and will only happen based on their fundamental assessment of economic sustainability."