Markets Rise on Housing Data, Comments by Fed Chair
Friday, August 21, 2009; 4:31 PM
Stocks climbed to their highest levels this year Friday after a surprisingly strong housing report and Federal Reserve Chairman Ben S. Bernanke offered an upbeat assessment of the economy.
The Dow Jones industrial average, an index of blue chip stocks, climbed 1.7 percent or 155.91 points to close 9505.96, while the broader Standard & Poor's 500-stock index gained 1.9 percent or 18.76 points to 1026.13. The tech-heavy Nasdaq was up 1.6 percent or 31.68 points to 2020.90.
The rally helped wipe out a sell-off on Monday when investors became nervous about the pace of the global economic recovery. The Dow was up about 2 percent for the week, while the S&P 500 and Nasdaq gained 2.2 percent and 1.8 percent respectively.
Speaking at an economic symposium sponsored by the Kansas City Fed, Bernanke told an audience that the world economy is starting to emerge from its deep recession. The extraordinary interventions by the Fed and its counterparts around the world averted global catastrophe, he said.
Investors also cheered better-than-expected data on sales of previously owned homes. Homes sales soared 7.2 percent in July, the largest monthly increase in a decade, according to the National Association of Realtors. Foreclosures continued to weigh on the market, bringing down median home prices another 15 percent.
"It was a surprising strong number and another sign that the economy is healing and transitioning out of the great recession," said Robert Dye, a senior economist at PNC Financial Services Group in Pittsburgh.
Crude oil prices surged nearly 2 percent to settle at $73.89 a barrel -- a new high for the year. That buoyed energy stocks, including ConocoPhillips, which climbed more than 2 percent.