Fed comments soothe jitters on Wall Street
NEW YORK REPORT
US stocks rebounded from their worst decline since November yesterday after Federal Reserve chairman Ben Bernanke defended the Fed’s bond-buying stimulus and sales of new homes hit a four and a half year high.
The S&P 500 had climbed six per cent for the year and came within reach of all-time highs before the minutes from the Fed’s January meeting were released last Wednesday. Since then, the benchmark S&P 500 has fallen one per cent.
Bernanke, in testimony before the Senate Banking Committee, strongly defended the Fed’s bond-buying stimulus programme and quietened rumblings that the central bank may pull back from its stimulative policy measures, which were sparked by the release of the Fed minutes last week.
Bernanke’s comments helped ease investors’ concerns about a stalemate in Italy after a general election failed to give any party a parliamentary majority.
Bernanke “certainly said everything the market needed to feel in order to get comfortable again”, said Peter Kenny, managing director at Knight Capital.
Gains in homebuilders and other consumer stocks, following strong economic data, lifted the S&P 500, and a 5.7 per cent jump in Home Depot to $67.56 boosted the Dow industrials.
Economic reports that showed strength in housing and consumer confidence also supported stocks.
The Dow Jones industrial average gained 115.96 points, or 0.84 per cent, to 13,900.13 at the close.
The Standard & Poor’s 500 Index rose 9.09 points, or 0.61 per cent, to 1,496.94.
The Nasdaq Composite Index advanced 13.40 points, or 0.43 per cent, to close at 3,129.65.