Stock market climbs even as Internet names take dip
NEW YORK -- Soothing words from Federal Reserve Chair Janet Yellen helped pull the stock market out of a morning slump 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 running, sending their stocks down 2 percent or more. Whole Foods sank 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." As a result, 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 was the only major index to fall. It gave up 13.09 points, or 0.3 percent, to 4,067.67.
The S&P 500 index is within striking distance of its all-time 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,"
Kinahan said that many investors are wondering whether the stock market is priced too high. The average stock trades at 16 times its earnings over the past year, according to S&P Capital IQ.
That's slightly higher than the historical average. Some tech stocks, however, are valued much higher. Amazon's stock has lost 27 percent this year, but it's still trading at a lofty 465 times earnings.
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