COMMENTARY | COLUMNISTS | GEORGE CHAMBERLIN

Dow climbs to record as Fed trims stimulus on improving economy

The Dow Jones industrial average closed at an all-time record high Wednesday after the Federal Reserve said the economy continues to rebound from the deep recession.

The Dow gained 45.47 points to 16,580.84, breaking the old record high of 16,576.66 set Dec. 31. The Nasdaq composite index was up 11.01 points to 4,114.56 and the Standard and Poor’s 500 index rose 5.62 points to 1,883.95, ending April with a 0.6 percent gain, its third straight monthly advance.

The Fed's Open Market Committee continued its tapering effort by cutting bond purchasing by $10 billion to $45 billion. However, it maintained its policy on short-term interest rates and continues to monitor the employment situation.

Oil fell $1.54 to $99.74 a barrel after a government report showed U.S. oil reserves rose to record highs. Gold dipped 40 cents to $1,295.90 an ounce.

Facebook Inc. (Nasdaq: FB) jumped 2.8 percent to $59.78 as Internet stocks recovered from earlier losses. CEO Mark Zuckerberg said Wednesday at a conference that Facebook is offering improved tools and a more streamlined experience for logins.

Pepco Holdings Inc. (NYSE: POM) climbed 17 percent to $26.76 after Exelon Corp. (NYSE: EXC) agreed to buy Pepco in an all-cash deal for $6.8 billion.

Twitter Inc. (NYSE: TWTR) dropped 8.6 percent to $38.97 after saying user growth slowed. The microblogging site reached 255 million members in the first quarter, sending year-over-year growth to 25 percent from 30 percent in the previous period.

Since then, it has rebounded 7.9 percent, led by an advance of 17 percent in Johnson & Johnson (NYSE: JNJ) and gains of 14 percent each in Caterpillar Inc. (NYSE: CAT), Exxon Mobil Corp. (NYSE: XOM) and International Business Machines Corp. (NYSE: IBM)

The S&P 500 is within 0.4 percent of a record. Its 8.2 percent recovery from a low of 1,741.89 on Feb. 3 has been led by a 14 percent rally in energy stocks and increases of 11 percent each in industries least tied to economic growth: utilities and home-product makers.

The gauge’s best-performing stock since the 2014 bottom is Nabors Industries Ltd. (NYSE: NBR), a drilling contractor, which is up more than 50 percent.

Fed Chair Janet Yellen is winding down record stimulus as the world’s largest economy shows signs of rebounding from a first-quarter standstill. At the same time, the Fed repeated that it’s likely to keep the benchmark interest rate near zero for a “considerable time” after bond purchases end.

Data on Wednesday showed the U.S. economy barely grew in the first quarter as harsh weather chilled investment and exports dropped. Gross domestic product grew at a 0.1 percent annualized rate from January through March, compared with a 2.6 percent gain in the prior quarter.

The pullback in growth came as snow blanketed much of the eastern half of the country, keeping shoppers from stores, preventing builders from breaking ground and raising costs for companies.

U.S. companies boosted payrolls by 220,000 in April, figures from the ADP Research Institute in Roseland, N.J., showed Wednesday. The median forecast of 45 economists surveyed by Bloomberg called for an advance of 210,000.

Seventy-five percent of the 314 S&P 500 members that have reported earnings this season have posted profit that exceeded analysts’ estimates, data compiled by Bloomberg show.

About 52 percent beat sales projections, according to the data.

Profits for members of the index climbed 3.4 percent in the first quarter, according to analyst estimates compiled by Bloomberg. They had predicted an increase of 0.7 percent as recently as April 17. Revenue probably rose 2.8 percent in the quarter, the projections show.

Nine out of 10 major industries in the S&P 500 advanced Wednesday, with raw-material and industrial shares climbing more than 0.6 percent for the biggest gains. Energy shares had the only decline.

The Dow Jones Internet composite index gained 0.3 for its second straight day of gains, after recovering from an earlier drop of 1.7 percent.

Netflix Inc. (Nasdaq: NFLX) climbed 0.7 percent to $322.04.

EBay Inc. (Nasdaq: EBAY) dropped 5 percent to $51.83 after forecasting second-quarter revenue of $4.33 billion. That compared with the average analyst projection of $4.4 billion, according to data compiled by Bloomberg. EBay also posted a first-quarter net loss after taking a $3 billion tax charge to let it repatriate foreign earnings.

Express Scripts Holding Co. (Nasdaq: ESRX) fell 6.2 percent to $66.58 after cutting its 2014 forecast. The pharmacy benefit manager reported first-quarter earnings excluding one-time items of 99 cents a share, missing the $1.01 average analyst projection. Cold weather and fewer Obamacare enrollees hurt earnings, the company said.

— Bloomberg contributed to this report.

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