Mon, January 25, 2010
Business > Markets

US stocks up as Bernanke uncertainty wanes

2010-01-25 15:09:19 GMT2010-01-25 23:09:19 (Beijing Time)  SINA.com

Stocks rose Monday morning, rebounding from the worst losing streak since the market bottomed last March.

The market is bouncing back from a three-day losing streak that saw the Dow Jones industrial average fall 5.2 percent as concerns eased that Federal Reserve Board Chairman Ben Bernanke would be reappointed. Investors had become increasingly worried late last week that he might not be given a second term as head of the Fed.

Naming a different Fed chairman than Bernanke, whose term ends Sunday, would have worried investors about how a new leader could reshape monetary policy. With Bernanke in charge, the Fed has repeatedly said it plans to keep interest rates low for the foreseeable future to stimulate the economy — an action that is supportive of the stock market.

Stocks tumbled late last week following a new proposal from President Barack Obama to tighten regulation over the banking sector spooked the market.

Overseas markets continued their slide Monday, following the decline in U.S. markets to end last week. Asian shares fell again following concerns about the banking sector. The Bank of China said it plans to raise billions of dollars to replenish capital and meet new government requirements.

In early morning trading, the Dow Jones industrial average rose 71.34, or 0.7 percent, to 10,244.32. The Standard & Poor's 500 index rose 9.49, or 0.9 percent, to 1,101.25, while the Nasdaq composite index rose 15.23, or 0.7 percent, to 2,220.52.

Hearings on Bernanke's reappointment expected this week come as the Fed will be holding a regularly interest-rate setting meeting on Tuesday and Wednesday. The Fed is expected to hold rates at record lows, so investors will be examining the statement for signs of economic strength and to try and determine when the Fed might begin to raise rates.

Investors will also receive plenty of economic data and earnings reports throughout the week to help determine how the economy is faring. Thus far, earnings have mostly topped analysts' expectations. But unlike in recent quarters, that has not helped send stocks higher. Analysts say traders are paying more attention to specifics within earnings reports, such as revenue growth, and forecasts rather than seizing on a better-than-expected profit as a reason to buy shares.

Dozens of earnings reports from nearly all sectors are scheduled for release throughout the week, including Apple Inc., Johnson & Johnson, Amazon Inc. and AT&T Inc.

The first estimate of the nation's fourth-quarter economic output is due out Friday. The gross domestic product report is expected to show the economy grew by an annual rate of 4.5 percent during the October-December period, further showing a recovery is underway. The economy grew 2.2 percent during the third quarter.

Reports from the housing market will also be in focus throughout the week. The battered sector has shown some signs of improvement, though reports have indicated that recovery is slow and uneven.

Sales of existing homes likely fell 7.3 percent to a seasonally adjusted annual rate of 6.06 million in December, compared with the previous month. The decline is likely due to the timing of tax credit that was eventually extended. The report is due out later Monday.

Buyers last month no longer had to rush to buy homes before the end of the tax credit, which was originally set to expire on Nov. 30. That pushed sales higher in November. The credit was extended and now expires in April.

(Agencies)

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