U.S. stocks advanced, recovering from the Standard & Poors 500 biggest two-day slump since June, amid optimism that Janet Yellen won’t hurry to withdraw stimulus and signs that lawmakers step forward to raise the debt ceiling.
The Standard & Poor’s 500 Index climbed 0.1% to 1,656.40 at 4 p.m. EDT. The Dow Jones Industrial Average added 26.45 points, or 0.2%, to 14,802.98. The Nasdaq Composite Index fell 0.5% to 3,677.78, extending its three-day drop to 3.4%, the most since June 24. About 7.1 billion shares exchanged hands on U.S. exchanges today, 15% above the three-month average.
House Republican and Senate Democratic leaders are open to a short-term increase in the debt limit, said congressional aides of both parties who spoke on condition of anonymity to discuss strategy.
Stocks were boosted after news from the Federal Reserve. Investors say that continued stimulus efforts from the Fed have helped support markets amid the political deadlock. Stocks rose in early trading as the White House announced that Janet Yellen would be nominated to lead the Fed, as she is seen as a proponent of easy-money policies.
“Today’s reaction is favorable based on Yellen’s nomination, and secondly there seems to be some thawing of the rhetoric which sets the stage for a resolution that could come before the deadline,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said in a phone interview for Bloomberg. “That’s positive for the broad equity market.”
In corporate news, AT&T Inc. rallied 1.9%, the most in the Dow, to $33.75. The largest U.S. phone company is near an agreement to sell its wireless towers to Crown Castle International Corp., people familiar with the matter said.
Hewlett-Packard rallied 8.9%, the most since May 23, to $22.60. Meg Whitman, who enters her third year as CEO, is contending with declining sales from slack demand for personal computers and price cuts in the business-technology market.
Yum slumped 6.7% to $66.48, the lowest since April 23 after the owner of the KFC fast-food chain cut its 2013 earnings forecast as third-quarter earnings failed reaching analysts’
Family Dollar Stores Inc. lost 1.1% to $68.71. The discount retailer issued a forecast for fiscal 2014 profit that fell short of estimates and reported fourth-quarter revenues and same-store sales that missed forecasts.
Men’s Wearhouse Inc. added 28% to $45.03 after Jos. A. Bank Clothiers Inc. said it’s seeking to buy the apparel retailer for $2.3 billion in cash, or $48 a share. Men’s Wearhouse rejected the offer, saying the bid “significantly” undervalued the company and wasnt in the best interest of shareholders. Jos. A. Bank gained 6.4 percent to $44.33.