On Wall Street, stocks record huge gain

Associated Press

NEW YORK

Stocks leapt to multiyear highs and recorded one of their biggest gains of the year Monday after Federal Reserve Chairman Ben Bernanke suggested that the economy still needs help to produce faster job growth.

The Dow Jones industrial average climbed 160.90 points to 13,241.63, its third-best showing this year. The Standard & Poor’s 500 index rose 19.40 points to 1,416.51, its highest close since May 2008.

The Nasdaq composite index, which is closing in on a 20 percent rally for the year, climbed 54.65 points to 3,122.57, its best finish since November 2000.

Health-care stocks led the market on a day when the Supreme Court began hearing arguments on the constitutionality of President Barack Obama’s 2010 health-care law, which will require Americans to carry insurance or pay a penalty.

If the court upholds the law, the insurance companies stand to gain 30 million customers. But the full impact is hard to judge.

Health-care stocks gained 1.7 percent as a group Monday, beating the S&P’s 1.4 percent gain. Aetna rose 3.1 percent, WellPoint 2.9 percent and UnitedHealth Group 2.7 percent. The court is expected to decide the case in June.

Bernanke, speaking to a group of economists, sounded pessimistic about jobs even though the country has added an average of 245,000 jobs each month since December and the unemployment rate has fallen steadily since last summer.

He said the number of people working and the hours they work are well below where they stood before the 2008 financial crisis.

Bernanke’s comments could mean two things for the market, both good for stocks.

One, they could suggest that he believes the Fed needs to continue to prop up the economy — by keeping short-term interest rates near zero and perhaps by buying more bonds later.

The Fed has embarked on two previous rounds of bond-buying, most recently in August 2010. The idea is to drive down long-term interest rates and encourage investors to buy stocks. The second round ignited a 28 percent stock rally in eight months.

“He didn’t say anything new. It’s just the fact that he said it,” said Chip Cobb, senior vice president of Bryn Mawr Trust Asset Management in Pennsylvania.

And two, Bernanke said that some recent hiring is companies making up for laying off too many people in 2009, rather than a sign of a growing economy. That could be a relief to investors worried that labor costs would grow too quickly and shrink earnings, said Paul Zemsky, head of asset allocation at ING Investment Management in New York.