Stocks ended modestly higher on Wednesday after Federal Reserve Chairman Ben Bernanke said the timeline for winding down the U.S. central bank's stimulus program was not set in stone.
Shares of Bank of America (BAC.N) and Yahoo (YHOO.O) rose after both banking companies reported stronger-than-expected quarterly results. Both ranked among the names giving the biggest boost to the S&P 500.
The three major U.S. stock indexes bounced back from Tuesday's lower close, which broke the S&P 500's eight-day string of gains.
Bernanke said the U.S. central bank still expects to start scaling back its massive bond-buying program later this year, but he said the timeline depended on the economic outlook. He made the comments on Wednesday before the House Financial Services Committee as part of his twice-yearly report to Congress on monetary policy. On Thursday, he will appear before the Senate Banking Committee.
"He's still being quite vague in describing exactly what to expect next, and I think that serves his purposes. He's trying to minimize the impact of policy change on the markets," said Lawrence Creatura, portfolio manager at Federated Investors in Rochester, New York.
Bernanke's comments on May 22 triggered a drop of nearly 6 percent in the S&P 500 in the month that followed. But remarks from Bernanke and other Fed officials since then have calmed the market and erased those declines. The S&P 500 is just several points away from the all-time intraday high of 1,687.18 it reached on May 22. For the year, the S&P 500 is up 17.9 percent.
Yahoo shares shot up 10.3 percent to close at $29.66, its highest since May 2008. While Yahoo's results were mostly lackluster, news of its stake in the fast-growing Chinese e-commerce firm Alibaba ALIAB.UL and its product development efforts lifted the stock. Yahoo hit an intraday high at $29.73.
The Dow Jones industrial average .DJI rose 18.67 points, or 0.12 percent, to end at 15,470.52. The Standard & Poor's 500 Index .SPX gained 4.65 points, or 0.28 percent, to finish at 1,680.91. The Nasdaq Composite Index .IXIC advanced 11.50 points, or 0.32 percent, to close at 3,610.00.
Bank of America Corp (BAC.N) shares gained 2.8 percent to $14.31, while BNY Mellon Corp (BK.N) shares rose 1.9 percent at $30.92. Both led the financial sector higher after the banks reported quarterly earnings.
Shares of DuPont (DD.N) jumped 5.3 percent to $57.25 after Trian Fund Management's Nelson Peltz said he has amassed a "big stake" in the chemicals maker. The stock was the Dow's top percentage gainer.
On the flip side, shares of American Express (AXP.N) fell 1.9 percent to $76.80 after the European Commission said it would propose limits on fees that banks can charge to process debit-card and credit-card transactions. After the bell, its shares slid 0.9 percent to $76.10 after it reported results. During the regular session, American Express was the Dow's biggest percentage decliner.
Part of the day's upbeat tone came from the Federal Reserve's Beige Book, which said the U.S. economy continued to grow at a modest to moderate pace in June and early July, with manufacturing expanding in most areas of the country.
Volume was roughly 5.7 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, below the average daily closing volume of about 6.4 billion this year. On Monday, volume hit its lowest for any full trading day this year.
In Wednesday's session, advancers outpaced decliners on the NYSE by a ratio of nearly 2 to 1. On the Nasdaq, three stocks rose for every two that fell.