SAN FRANCISCO: U.S. stocks finished mostly higher Monday, after data showing activity in the manufacturing sector rose to its highest level in four months, but closed off session highs as traders reacted to Federal Reserve Chairman Ben Bernanke’s comments on monetary policy.
The Nasdaq composite fell for a second straight session as most technology stocks gave up early gains.
“I don’t see a lot of conviction or breadth” in U.S. equities trading, said Matthew Tuttle, chief investment officer at Tuttle Wealth Management LLC. “I would be a little concerned about [Tuesday] barring any new good news out of somewhere before we open.”
The Dow Jones industrial average closed up 77.98 points, or 0.6 percent, at 13,515.11. It added to gains immediately after the manufacturing data, rising by as much as 161 points, but the blue-chip benchmark gave up much of that rise following a speech by Bernanke in Indianapolis, after which he took audience questions.
Shares of UnitedHealth Group Inc., up 1.9 percent, and American Express Co., up 1.5 percent, led the Dow’s gainers.
The S&P 500 index gained 3.82 points, or 0.3 percent, to 1,444.49. The consumer staples and health-care sectors led the advance on the index.
The Nasdaq composite closed modestly lower, down 2.70 points, or 0.1 percent, at 3,113.53. Shares of Apple Inc., the index’s biggest component, fell 1.2 percent.
Seasonal factors provided some support to equities Monday. The “first day of the month tends to be pretty powerful as people pour money into 401(k)s,” and money managers are “getting crushed by their benchmarks so they are being forced into a ‘risk on’ position,” said Tuttle.
In his speech to the Economic Club of Indiana, Bernanke attempted to answer some of the fierce criticism and public unease facing the Fed’s third round of bond purchases.
Bernanke tried to demystify the purchases, saying the basic monetary policy strategy “is the same as it has always been.”
“The difference is that, with short-term interest rates nearly at zero, we have shifted to tools aimed at reducing longer-term interest rates more directly,” he said.
Charles Plosser, president of the Federal Reserve Bank of Philadelphia, said last week that the Fed’s third round of quantitative easing, announced last month, is unlikely to result in much benefit for growth or employment. The comments poured cold water on the idea that Bernanke has built a broad consensus among his Fed colleagues.