Wall St rebounds as Bernanke prospects brighten

15Jan

US stocks posted modest gains, rebounding from last week’s heavy sell-off as prospects improved for the confirmation of Federal Reserve chairman Ben Bernanke for a second term.

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The Dow Jones Industrial Average rose 22.98 points (0.23 per cent) to 10,195.96 at the closing bell, coming off the market’s worst weekly losses since last March.

The Nasdaq composite added 5.68 points (0.26 per cent) to 2,210.97 and the broad-market Standard & Poor’s 500 index advanced 4.96 points (0.45 per cent) to a preliminary close of 1,096.72.

Market calms

Analysts said the markets had calmed down after several days of nervous trade during which President Barack Obama launched a series of initiatives to restrict the banking sector and senators raised doubts about Bernanke’s confirmation.

“The market got some early encouragement from reports that Fed chairman Ben Bernanke will be confirmed to a second term in a Senate vote this week,” said Scott Marcouiller at Wells Fargo Advisers.

The mood was tempered by news that sales of US existing homes fell more than expected in December, by nearly 17 per cent, following a three-month surge driven by a government tax credit.

Joel Naroff at Naroff Economic Advisers said the report was not unexpected but still showed the economy and the housing market remain fragile.

“This report also makes it clear that while housing may be out of intensive care, it is not yet ready to leave the hospital,” he said.

“There is no need to panic but thoughts of a strong economic recovery should be tabled for a while.”

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