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US STOCKS-Wall Street advanced after Bernanke statement

Source : REUTERS
Last Updated: Wed, Jul 17, 2013 17:19 hrs

* Bank of America up after earnings

* Housing starts below expectations

* Indexes up: Dow 0.2 pct, S&P 0.35 pct, Nasdaq 0.34 pct

By Chuck Mikolajczak

NEW YORK, July 17 (Reuters) - U.S. stock indexes advanced modestly at the open on Wednesday, after U.S. Federal Reserve Chairman Ben Bernanke reiterated the central bank's plan to begin to scale back its bond-buying program later this year.

In prepared remarks ahead of his semiannual monetary policy report before the House of Representatives Financial Services Committee at 10:00 a.m. EDT (1400 GMT), Bernanke stayed near the timeline he first laid out last month, saying the Fed's bond-buying program would cease by mid-2014, although he stressed the plan could be subject to change.

Financial markets have been highly sensitive to speculation over when the Fed will start to wind down its bond-buying program. Comments by Bernanke and minutes from a Fed meeting in late May triggered a 6-percent drop in the S&P 500 in the month that followed.

But statements from Bernanke and Fed officials in recent weeks have placated investors and erased those declines, with the S&P rallying to fresh record highs on Monday.

"It's probably a fair assessment of the situation and it's probably what the average investor expected," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

"We had a few communication mishaps earlier in the summer and my view is he just wanted to eliminate all doubt - clarity is good."

The Dow Jones industrial average gained 31.34 points, or 0.20 percent, to 15,483.19. The Standard & Poor's 500 Index rose 5.85 points, or 0.35 percent, to 1,682.11. The Nasdaq Composite Index advanced 12.13 points, or 0.34 percent, to 3,610.63.

Later in the session at 2:00 p.m. (1800 GMT), the Fed will release its Beige Book of regional economic conditions.

Financial stocks advanced, led by gains in Bank of America Corp, up 1.6 percent to $14.14, and BNY Mellon Corp , which rose 3.9 percent to $31.54, after they reported quarterly earnings.

But the sector's advance was checked as PNC Financial fell 2.4 percent to $72.70 in the wake of its second-quarter results. The S&P financial sector gained 0.2 percent.

Other S&P 500 companies scheduled to report earnings on Wednesday include American Express Co, eBay Inc , IBM and Intel Corp.

Economic data showed housing starts dropped 9.9 percent to a seasonally adjusted annual rate of 836,000 units, the lowest level since August last year and below the 959,000 forecast.

American Express fell 3.4 percent to $75.61 as the biggest drag on both the Dow and S&P 500 after the European Commission said it would propose a limit of 0.2 percent and 0.3 percent on the fees that banks charge to process debit card and credit card transactions. Visa Inc dipped 0.3 percent to $187.87 and MasterCard Inc shed 0.7 percent to $585.65.

Mattel Inc slumped 7.1 percent to $43.05 after the world's largest toymaker reported a weaker-than-expected 23 percent drop in profit as Barbie sales fell for the fourth straight quarter.

Analysts expect S&P 500 companies' second-quarter earnings to have grown 3 percent from a year earlier, with revenue up 1.5 percent, according to data from Thomson Reuters.

Of the 36 companies in the S&P 500 that have reported results through Tuesday morning, 63.9 percent beat analysts' expectations, and 55.6 percent surpassed revenue estimates.

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