25 February 2010Wall Street welcomes Bernanke low-rate signal
NEW YORK - US stocks rebounded strongly Wednesday as sentiment got a lift from Federal Reserve chairman Ben Bernanke' signal that near-zero interest rates were still needed.
The Dow Jones Industrial Average climbed 91.75 points (0.89 percent) to 10,374.16, a day after triple-digit losses on economic recovery worries.
The technology-heavy Nasdaq rose 22.46 points (1.01 percent) to 2,235.90 and the broad-market Standard & Poor's 500 index advanced 10.64 points (0.97 percent) to 1,105.24.
Bernanke signaled to lawmakers Wednesday that the central bank is not yet ready to abandon its ultra-low interest rates as it tries to keep a tentative economic recovery on track.
The equity markets nearly recouped all of Tuesday's decline as traders reacted "positively" to Bernanke's testimony on Capitol Hill, analysts at Charles Schwab & Co said in a client note.
"The Street let out a collective sigh of relief," said Andrea Kramer of Schaeffer's Investment Research.
The central bank has held its base rate near zero for more than a year to support a recovery from the worst recession in decades.
But last week the Fed shocked markets with a sudden quarter point hike in the discount rate, the rate it charges banks for emergency loans, triggering speculation of further credit tightening.
The market focus on the Fed chief's remarks overshadowed an unexpected drop in January new home sales to a record low.
Sales plunged 11.2 percent to a seasonally adjusted annual rate of 309,000, from a revised December rate of 348,000, the Commerce Department said in a fresh sign of weakness in the troubled housing market.
The third consecutive month of declining sales surprised most analysts who had expected sales to increase to 354,000.
Toll Brothers, an embattled luxury homebuilder, slipped 0.63 percent to 18.78 dollars after reporting a first-quarter loss.
Saks rose 0.28 percent to 7.10 dollars after the upscale retail group posted better-than-expected results and narrowed its quarterly loss.
Among financials, Citigroup rose 2.99 percent to 3.45 dollars, Goldman Sachs gained 1.04 percent at 158.33 dollars and Bank of America added 2.45 percent at 16.33 dollars.
The positive Wall Street opening came a day after the market took a beating in response to a surprisingly weak reading on US consumer confidence and official data on the banking sector that was a grim reminder of the challenges facing the country's recovery.
Bonds fell. The yield on the 10-year Treasury bond rose to 3.695 percent from 3.691 percent Tuesday and that on the 30-year bond climbed to 4.634 percent from 4.632 percent. Bond prices and yields move in opposite directions.
- AFP /ls
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