Dow Inches Up to a New Record

By Corrie Driebusch 

The Dow Jones Industrial Average eked out a fresh record high on Wednesday in quiet trading following uneventful testimony from Federal Reserve Chairwoman Janet Yellen.

The Dow industrials rose 15.38 points, or 0.1%, to 18224.57. The S&P 500 slipped 1.62 points, or 0.1%, to 2113.86.

The Nasdaq Composite declined 0.98 point, or 0.02%, to 4967.14, snapping a ten-session streak of gains. The index remains within striking distance of 5000, a level last hit roughly 15 years ago.

On Wednesday, traders watched Ms. Yellen's congressional testimony, parsing it for clues about when and how fast interest rates will rise, but her comments did not include any surprises.

"Everybody's just trying to figure out what the Fed is going to do. That's kind of the biggest topic on peoples' minds, especially domestically," said R.J. Grant, associate director of equity trading at KBW Inc.

In her Tuesday testimony, Ms. Yellen indicated the central bank is moving toward raising interest rates later this year as the economy has improved, and stocks pushed to record highs after these comments. On Wednesday, she repeated her message.

Even as stocks climbed to fresh highs in recent sessions, trading volumes have been low. In January, large intraday swings in stocks were common in daily trading, often driven by moves in oil prices, foreign currencies as well as concerns about Europe. Trading on Wednesday was relatively slow, with no headlines to spur a big market move.

The Chicago Board Options Exchange Volatility Index, or VIX, hit a new 2015 low. The index, which measures expectations for swings in the S&P 500 and is commonly considered a fear gauge of financial markets, ended 1.1% higher at 13.84 for the day.

"If you're a mountain climber, as you get to the icier peaks, you have to go more slowly; that's why markets tend to move higher much more carefully than they go lower," said David Kelly, chief global strategist for J.P. Morgan Asset Management. He said he anticipated the grind higher to continue.

"The reality is that cash is paying nothing, fixed income is unattractive, therefore money will move toward equities," he said.

Among the gainers on Wednesday were biotech companies, a sector that has posted strong gains over the past month as investors searched for growth stocks.

"You keep seeing more and more noise around M&A in the biotech space," said Ian Winer, head of equities trading at Wedbush Securities, referring to a media report Wednesday that Pharmacyclics Inc. was considering a sale, as well as more broadly to the recent news that Valeant Pharmaceuticals International Inc. will buy Salix Pharmaceuticals Ltd .

The SPDR S&P Biotech ETF is up 9% in the past month, compared with the S&P 500's 3% gain in the same period.

In commodity markets, crude-oil futures snapped a five-session losing streak, rising 3.5% to $50.99 a barrel. Gold futures added 0.3% to $1201.00 an ounce.

Action was muted in the Treasury market, with the 10-year note yield declining to 1.968% from 1.987% on Tuesday. Bond yields fall as prices rise.

New-home sales fell slightly in January but the overall pace remained near a six-year high. Sales of newly built, single-family homes decreased 0.2% from a month earlier, according to the Commerce Department, a smaller decline than economists surveyed by The Wall Street Journal had expected.

In corporate news, Hewlett-Packard Co. said its earnings for the January quarter fell 4.1% as sales of desktop computers declined sharply from a year ago and the company's revenue growth slowed across its different segments. Shares fell 9.9%.

Chesapeake Energy Corp. said it would reduce its rig operations to the lowest level since 2004, after higher production volume was unable to offset lower prices in the fourth quarter, leading to weaker-than-expected earnings. Shares fell 9.6%.

European stocks fell modestly. France's CAC 40 slipped 0.1% and Germany's DAX closed roughly flat. The U.K.'s FTSE 100 declined 0.2%, pulling back from an all-time high.

Write to Corrie Driebusch at [e-mail]

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