Traders 'take a breather,' buying stocks and bonds
NEW YORK -- The stock market is focusing on the positive.
Major stock indexes rose for a second day on Wednesday. It was the first two-day stretch of gains since the Federal Reserve gave a timetable for throttling back its economic stimulus a week ago.
Even news that the economy grew at a much slower annual rate in the first quarter than previously estimated -- 1.8 percent versus 2.4 percent -- didn't dampen the buying. In fact, it persuaded some traders that the Fed could extend its easy money policies beyond next year. That would likely be a boon for the economy and the stock market.
The market's gains were decisive. The Dow Jones industrial average jumped 149.83 points, or 1 percent, 14,910.14. All 10 sectors in the Standard & Poor's 500 index were higher, led by health care and utilities.
Investors also seemed to realize that they dumped too many stocks last week, when they panicked after the Fed outlined plans on how it might eventually end its stimulus measures.
"The sell-off was a little bit overdone," said David Coard, head of fixed-income sales and trading at Williams Capital Group in New York. "Sometimes you've got to take a breather."
The Standard & Poor's 500 rose 15.23, or 1 percent, to 1,603.26. The Nasdaq composite index gained 28.34, or 0.9 percent, to 3,376.22.
The yield on the 10-year Treasury note fell for the first time since June 14, slipping to 2.54 percent from 2.61 percent.
The price of gold plunged $45.30, or 3.6 percent, to $1,229.80 an ounce, its lowest price in three years. The reasons for the sell-off weren't entirely clear. Investors tend to buy gold when they're looking for a safe place to put money. Wednesday, they did that by buying stocks in dividend-rich, stable sectors -- such as utilities -- as well as government bonds.