Yellen's reassurance that interest rates will remain low calms market
NEW YORK — Soothing words from Federal Reserve Chair Janet Yellen helped pull the stock market out of a morning slump on Wednesday, but Internet companies and Whole Foods Market plunged, taking the Nasdaq down.
Traders dropped NetApp, salesforce.com and other tech companies for a second day, sending their stocks down 2 percent or more. Whole Foods plunged 19 percent after cutting its profit forecast.
Yellen told the Joint Economic Committee of Congress that a tough job market and weak inflation meant that the Fed will likely keep borrowing rates low for a “considerable time.” Because of that, she said, the economy still needed the Fed's help.
Yellen's comments appeared to ease concerns that the Fed was going to remove more support. The stock market had wandered lower in morning trading, then turned from a loss to a gain before the lunch hour.
“I think the market breathed a sigh of relief that she wasn't going to unveil something new,” said Jeff Kleintop, chief market strategist at LPL Financial.
The Standard & Poor's 500 index gained 10.49 points, or 0.6 percent, to close at 1,878.21.
The Dow Jones industrial average climbed 117.52 points, or 0.7 percent, to 16,518.54. The Nasdaq fell 13.09 points, or 0.3 percent, to 4,067.67.
The S&P 500 index is within striking distance of its closing high of 1,890 reached on April 2.
“Whenever you're near all-time highs, you're going to see skittishness,” said JJ Kinahan, chief strategist at TD Ameritrade. “In this market, the slightest news can change everything.”