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S&P 500 climbs to record as Fed supports low rates amid recovery

Comments from Federal Reserve Board Chair Janet Yellen on Wednesday helped turn stock prices higher.

The Standard & Poor’s 500 index rose 14.99 points to 1,956.98, a new closing high. The Dow Jones industrial average gained 98.13 points to 16,906.62, and the Nasdaq composite index was up 25.60 points to 4,362.84.

Yellen said any increase in short-term interest rates would be very slow and occur only after economic indicators, especially a significant increase in new job creation, are confirmed.

The Fed said it will continue to taper its bond-buying efforts.

Commodities continue to trade in a very tight range. Oil fell 37 cents to $105.99 a barrel and gold was off 70 cents to $1,272.70 an ounce.

FedEx Corp. (NYSE: FDX) advanced 6.2 percent as the operator of the world’s largest cargo airline predicted a pickup in domestic and global economic growth.

Adobe Systems Inc. (Nasdaq: ADBE) jumped 8.1 percent after posting revenue and profit that beat analysts’ estimates.

ConAgra Foods Inc. (NYSE: CAG) dropped 7.4 percent as the company cut its fourth-quarter forecast.

Economic data earlier this week showed that the U.S. cost of living rose more than forecast in May. The consumer price index increased 0.4 percent, the biggest advance since February 2013, a Labor Department report showed.

A pickup in inflation lessens the threat of a prolonged drop in prices that hurts economic growth, giving Fed officials reason to continue to scale back their unprecedented stimulus program.

The Fed trimmed bond-buying by $10 billion for a fifth straight meeting, to $35 billion, keeping it on pace to end the program late this year.

Fed officials predicted their target interest rate will be 1.13 percent at the end of 2015 and 2.5 percent a year later, higher than previously forecast. They lowered their long-run estimated rate, reflecting a slower growth rate for the U.S. economy.

Central bank participants estimated long-term growth for the U.S. economy of 2.1 percent to 2.3 percent, compared with 2.2 percent to 2.3 percent in March and 2.5 percent to 2.8 percent in January 2010 in the wake of the most recent recession.

Yellen said stock prices and valuations aren’t outside of historical norms and the Fed isn’t trying to gauge the right level for equities.

The S&P 500 has climbed 7.7 percent since a low on April 11 as data showed the economy is recovering from the impact of extreme weather earlier this year.

The gauge dropped 0.7 percent last week as violence in Iraq sent the price of Brent crude to the highest level in 11 months.

The benchmark index is trading at 16.5 times the projected earnings of its members, up from 15.5 times at the beginning of the year.

The Chicago Board Options Exchange Volatility Index, known as the VIX, lost 11 percent to 10.71, the lowest level since 2007. The measure of volatility has dropped 22 percent this year.

All 10 main industries in the S&P 500 rose Wednesday. Utilities advanced the most, with a gain of 1.8 percent. Raw-materials companies added 1 percent as a group.

FedEx jumped 6.2 percent to $148.95 as the company forecast an annual profit that topped some analysts’ projections as it reaps the benefits of a 20-month push to reduce costs and a global economic recovery that’s spurring an increase in shipping. FedEx’s fiscal fourth-quarter profit and revenue topped estimates.

Adobe rallied 8.1 percent to $73.03. The software maker attracted online subscribers at a faster-than-projected rate, returning the company to revenue growth for the first time in six quarters.

Walgreen Co. (NYSE: WAG) rose 3.8 percent to $75.88. Barclays analyst Meredith Adler upgraded the largest U.S. drug retailing chain to “overweight” from “equal weight” and increased her price target to $92 from $56.

Earnings could get a lift if the board decides to act on shareholder recommendations, she wrote.

ConAgra dropped 7.4 percent to $30.41. The packaged-food company that owns Chef Boyardee and Healthy Choice cut its earnings forecast amid slow sales of consumer foods and shrinking profit at its private-label business.

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