Stocks trimmed their gains but remained on track to snap a two-day losing streak Wednesday as soothing comments from Federal Reserve Chairman Ben Bernanke outweighed disappointing housing data.
The Dow Jones Industrial Average posted a gain of more than 110 points at its intraday high. Recently, the measure was up 72 points, or 0.7%, at 10355.42.
Twenty-eight of its 30 components rose. Bank of America, JPMorgan Chase, and Home Depot were the Dow's biggest gainers, up more than 2% each. The average's only decliners were Alcoa, off 1.4%, and Kraft Foods, down 0.3%.
Bernanke's two-day congressional testimony follows the Fed's move last week to increase its rate on emergency loans to banks. The Fed chief stressed that the move won't necessarily translate into an increase in the benchmark funds rate anytime soon--a message that was exactly what Wall Street wanted to hear.
"Anytime the Fed is at the end of an easy-money cycle, there's always a certain segment of the market that's on edge," said Keith Hembre, chief economist at First American Funds in Minneapolis. "As Bernanke pushes the timeframe for tightening out, that tends to be a surprise to that segment of people, which is a positive for equities."
Following the midmorning buying after Bernanke began his remarks, volume has leveled off. Composite volume in New York Stock Exchange-listed stocks recently hit 3.3 billion shares, a below-average pace. Gainers outnuumbered decliners almost three to one.
The Nasdaq Composite Index was up 0.7%. The S&P 500 rose 0.7%, led by gains in every sector except utilities, off 0.2%, and basic materials, off 0.4%. The financial sector was the strongest category in the index, up 1.5%.
The category was helped by Bernanke's testimony and reports that key senators are opposed to President Barack Obama's proposal to prohibit commercial banks from making certain risky bets with their own capital--a practice that has heavily contributed to Wall Street's profits the last few years.
"Whether we need that regulation, good or bad, there's probably some relief that the banks might not be put through this grueling exercise of decoupling," said Tim Evnin, equity portfolio manager at Evercore Wealth Management.
The session's key data release was dismal. The Commerce Department reported that new-home sales skidded 11.2% in January from December. Economists had expected sales would rise 3.8%. The drop erased all gains made in the housing market during the past year.
H&R Block slid 12.5% after saying it won't meet its fiscal-year guidance because tax-return preparation so far this season is short of where it was a year ago. Zale leapt 10.2% after saying it swung to a stronger-than-expected profit in its fiscal second quarter, snapping six straight quarters of losses. Dollar Tree jumped 11.8% after saying its fiscal fourth-quarter earnings rose 28% on better gross margins as the discount retailer continues to fare well during the downturn. The company forecast first-quarter earnings above expectations and revenue in line.
American depository shares of Toyota Motor were recently up 3.4%, as executives faced questions in Washington over their recent recalls.
In other markets, the dollar slipped against the Japanese yen and the euro. Crude-oil prices settled $1.14 higher at the key $80-per-barrel level, while gold futures slipped. Treasury prices were mixed. The two-year note gained 1/32 to yield 0.875%. The 10-year note fell 2/32 to yield 3.695%.
