Wall Street gains; economic data, Bernanke boost mood
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Wednesday, 26 August 2009 07:15

NEW YORK: U.S. stocks rose on Tuesday, Aug 25 as economic data and the renomination of Federal Reserve chief Ben Bernanke reassured investors and offset concerns about red ink in the federal budget, according to Reuters.

The Conference Board's August index of consumer confidence topped economists' forecast, while the S&P/Case-Shiller home price index rose for a second consecutive month in June, suggesting a recovery in two sectors crucial to a rebound in U.S. economy.

The consumer data and earnings news helped drive retail stocks higher. Women's clothing retailer Chico's FAS Inc, which reported solid results, gained 7.6 percent to US$12.79, and close-out retailer Big-Lots Inc , rose 6.5 percent to US$25.60.

Macy's Inc was up 3.5 percent at US$15.85 and the broader S&P Retail Index gained 1.8 percent.

"The missing ingredient has been the recovery in consumer spending. The market is now hopeful that the strong consumer confidence data could lead to better consumer spending numbers," said Keith Springer, president of Capital Financial Advisory Services in Sacramento.

The Dow Jones industrial average advanced 30.01 points, or 0.32 percent, to 9,539.29. The Standard & Poor's 500 Index gained 2.43 points, or 0.24 percent, to 1,028.00. The Nasdaq Composite Index rose 6.25 points, or 0.31 percent, to 2,024.23.

The three major indexes closed at 2009 highs, although they were off the year's intraday highs reached after the stronger-than-expected economic data. But in a repeat of Monday's action, the rally cooled somewhat in the afternoon.

The broad S&P 500 index briefly hit a 10-month intraday high. It remains on track for its sixth straight monthly gain.

A drop in oil prices weighed on energy shares. Exxon Mobil helped limit the Dow's gains.

Investors welcomed President Barack Obama's decision to keep Bernanke as Fed chairman.

"Bernanke has put his policies in place and now (with the reappointment), the market is reassured that he will unwind the policies in a timely manner. It's good to know that someone else won't come in and change everything," said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

The positive news overshadowed government forecasts that the U.S. national debt will nearly double over the next 10 years due to a slow recovery from the worst recession since the 1930s, and higher spending on retirement and medical benefits. - Reuters
 

Keith Springer is President of Capital Financial Advisory Services, a registered investment advisor, providing Wealth Management and Mortgage Consulting Services.  For more information on how to build and maintain a solid retirement plan, please contact Keith Springer at 916-925-8900 or Keith@KeithSpringer.com