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Gain in consumer confidence sends stocks higher

Gain in consumer confidence sends stocks higher

Investors put stocks back on an upward path Tuesday, encouraged by a report that U.S. consumers are regaining 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 consumer confidence report was released, but came off its highs shortly after. The other major stock indexes also gave up some of their gains.
The Conference Board said its 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. Concerns about flagging consumer confidence have triggered bouts of stock selling in recent weeks.
The stock market also got a boost from President Barack Obama's reappointment of Ben Bernanke as Federal Reserve chairman and a report showing a jump in home prices in the May-through-June quarter.
Bernanke's reappointment, while 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 late morning trading, the Dow Jones industrial average rose 67.57, or 0.7 percent, to 9,576.85. The Standard & Poor's 500 index rose 6.62, or 0.7 percent, to 1,032.19, while the Nasdaq composite index rose 10.77, or 0.5 percent, to 2,028.75.
About two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 379.1 million shares, compared with 356.9 million at the same time on Monday.
In other trading, the Russell 2000 index of smaller companies rose 3.71, or 0.6 percent, to 583.95.
Stocks were little changed Monday after four days of gains that took the Dow up 370 points and all the major indexes to fresh highs for the year. The market gave up early gains as financials retreated. Regional banks were especially hit hard amid concerns about potential mounting losses from commercial real estate.
The gains on Tuesday follow a trend that has characterized the market throughout the summer, where any dip in stocks or pause in trading is met with more buying as investors fear missing out on an extended rally. Though analysts have been warning of an eventual pullback in stocks after a 52 percent climb in the S&P 500 since early March, the market has yet to see a significant slide.
The stair-step advance has been encouraging to analysts, who see it as a sign of strength in the market.
"It's constructive that we've basically broken out to a new high and we're kind of consolidating and working slowly higher," said Nick Kalivas, vice president of financial research at MF Global.
Bond prices fell as the Treasury Department prepared to issue $42 billion in two-year notes. A total of $197 billion in Treasurys will be auctioned off throughout the week as part of the government's ongoing efforts to fund its economic stimulus programs.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.50 percent from 3.48 percent late Monday. The yield on the two-year note rose to 1.05 percent from 1.03 percent.


Updated : 2021-02-25 16:01 GMT+08:00