NEW YORK REPORT
US stocks rallied for a second straight day yesterday as Federal Reserve chairman Ben Bernanke reaffirmed his strong support for the Fed’s stimulus efforts, while the euro climbed after solid demand at an auction of Italian government debt.
Data on US housing and durable goods added to bullish sentiment in stocks, with the US benchmark S&P 500 rallying more than one per cent and an index of world stocks up one per cent.
Bernanke’s comments came on his second day of testimony in Congress. Yesterday he said the US jobless rate is unlikely to reach more normal levels for several years.
“It doesn't matter what the Fed minutes tell you, he is going to keep refilling the punch bowl until we get unemployment down below 6 percent,” said Keith Bliss, senior vice president at Cuttone & Co.
On Wall Street, the Dow Jones industrial average was up 175.24 points, or 1.26 per cent, at 14,075.37. The Standard & Poor’s 500 Index was up 20.92 points, or 1.40 per cent, at 1,517.86. The Nasdaq Composite Index was up 32.61 points, or 1.04 per cent, at 3,162.26.
In response to the financial crisis and deep recession of 2007-2009, the Fed has kept official borrowing costs at effectively zero, and it bought more than $2.5 trillion in mortgage and Treasury securities to keep long-term rates low.
US economic data added to positive sentiment. The January durable goods orders excluding transportation increased 1.9 per cent, the largest gain since December 2011, and well above economists' expectations of a 0.2 per cent gain.
Another report yesterday showed that contracts to buy previously owned homes approached a near three-year high last month.