U.S. equities turned in the best week since April as investors were captivated by the Federal Reserve’s script for managing the American economy, ignoring the improvisations on the Greek stage.
The Standard & Poor’s 500 Index finished the five days up 0.8 percent, the most since April 24, even as the index slipped in the final session. Equities were jolted higher as Fed Chair Janet Yellen signaled the central bank won’t be raising rates quickly as officials hold out for more decisive evidence of an economic rebound.
“The Fed announcement was relatively dovish and that won the day with regard to how people were positioning money for this week,” George Hashbarger Jr., a Knoxville, Tennessee-based portfolio manager at BPV Capital Management LLC, said in a phone interview. BPV has $1.9 billion under management. “The U.S. market has become fatigued with what is going on with Greece.”
The Dow Jones Industrial Average rose 117.11 points, or 0.7 percent, to 18,015.95. The Nasdaq Composite Index gained 1.3 percent to 5,117, topping its March 2000 intraday high on June 18. The Russell 2000 Index advanced 1.6 percent, also reaching a record.
The S&P 500 started the week by slipping below its average price for the past 100 days. The index had been trading in the smallest range since at least 1995 as concerns about the plans for higher interest rates and the impasse over Greek debt negotiations weighed on U.S. equities.
The benchmark gauge advanced June 17 after Fed policy makers indicated that while a pickup in the economy is keeping the central bank on track to raise rates this year, subsequent increases are likely to be more gradual than anticipated earlier, with Fed Chair Janet Yellen wanting more “decisive” evidence of a lasting turnaround.
The Fed’s rate view helped the index rally 1 percent the next day, leaving it half a percentage point below its all-time high. The gauge slipped in the final session on heightened volume amid the expiration of options and futures on stocks and indexes.
With the Fed taking center stage, U.S. investors pushed the situation in Greece to the wings. While a Greek default would have a significant symbolic impact, with just $73 billion of bonds outstanding -- less than one-tenth the size of Germany’s bond market -- the nation is likely too small for the impact to spill over to U.S. markets.
“Greece only accounts for something like less than 2 percent of euro-zone GDP, so the impact on U.S. economic growth is minimal,” said Phil Orlando, who helps oversee $360 billion as chief equity market strategist at Federated Investors Inc. in New York, in a phone interview Tuesday. “Think in terms of a ripple on a pond.”
Yellen herself downplayed the significance of the crisis.
“The United States has very limited direct exposure to Greece either through trade or financial channels,” she said during her press conference Wednesday.
European equities and bonds rose on the last day of the week in anticipation the crisis will soon end one way or another, with any contagion from a possible default contained. The European Central Bank increased funding available to Greek banks Friday, providing the country a few more days of financial breathing space as euro-area leaders prepare to meet Monday.
Eight of 10 main groups in the S&P 500 advanced during the week, led by a 2 percent jump in health-care companies.
Health insurers surged on speculation that the industry is headed for a round of mergers to boost profits. Anthem Inc. has explored a takeover of smaller health-insurance rivals Cigna and Humana Inc., a person with knowledge of the matter said.
Cigna rallied 13 percent and Aetna Inc. rose 7.1 percent, the most in more than three years, touching an all-time high.
The Nasdaq Biotechnology Index reached a record as Amgen Inc., Celgene Inc. and Biogen Inc. each gained more than 2.9 percent. Kythera Biopharmaceuticals Inc. soared 37 percent as Allergan Plc agreed to buy the maker of treatments for double chins and male pattern baldness for about $2.1 billion.
Consumer-staples companies climbed 1.9 percent for the second-biggest gain. ConAgra Foods Inc. jumped 14 percent after the food company was targeted by activist investor Jana Partners, which is looking to shake up the board.
TripAdvisor Inc. soared 20 percent, the most in the S&P 500, on a room-booking deal with Marriott International Inc.
Energy companies had the worst performance among S&P 500 groups, sliding 0.5 percent as offshore drilling companies retreated. The industry has been hit with a double blow from a glut of new rigs and a drop in demand for its vessels after oil prices fell. Transocean Ltd., Noble Corp. and Ensco Plc each tumbled more than 5.2 percent.
FedEx Corp. fell 4.2 percent, the most since March, after its fourth-quarter profit trailed analysts’ estimates. Oracle Corp. declined 6.2 percent, for the worst week since 2013, after profits were hurt by currency fluctuations and sagging sales to new and existing customers as buyers move to cloud-based products.