Investors put stocks back on an upward path Tuesday, encouraged by a report that consumers are regaining some confidence and news of Ben Bernanke's reappointment as Federal Reserve chairman.
The Dow Jones industrial average surged more than 100 points immediately after the report was released, but came off its highs shortly after. The other major stock indexes also pulled back.
The Conference Board's Consumer Confidence index rose to 54.1 this month from an upwardly revised 47.4 in July and far above the 47.5 reading analysts expected.
Despite the improvement, the reading is still a long way from showing that consumers are actually feeling optimistic about the economy, which is vital to any potential recovery. Investors' concerns about flagging consumer confidence have triggered bouts of stock selling in recent weeks.
Stocks got a boost from President Barack Obama's reappointment of Ben Bernanke as Federal Reserve chairman and a jump in home prices.
Bernanke's reappointment, though expected, came sooner than anticipated and removed any uncertainty about a potential replacement. Bernanke's aggressive moves to limit the damage from the financial crisis, including keeping interest rates at historic lows, have been credited with guiding the economy away from its worst recession since the 1930s.
Investors also got more good news on housing. A closely watched index showed home prices posted their first quarterly increase in three years. The Standard & Poor's/Case-Shiller's U.S. National Home Price Index rose nearly 3 percent from the first quarter, though was still down almost 15 percent from the second quarter of last year.
In midmorning trading, the Dow Jones industrial average rose 51.62, or 0.5 percent, to 9,560.90. The Standard & Poor's 500 index rose 5.07, or 0.5 percent, to 1,030.64, while the Nasdaq composite index rose 9.58, or 0.5 percent, to 2,027.56.