Stocks jump on Bernanke speech; oil prices hit high for the year
NEW YORK -- Stocks surged and oil prices touched a high for the year above $74 a barrel as Federal Reserve Chairman Ben Bernanke told investors what they wanted to hear: The economy is indeed on the verge of recovery.
Major stock indicators surged more than 1% in early trading Friday, including the Dow Jones industrials, which rose about 135 points. The Dow had been up about 50 points prior to Bernanke's comments, which came during an annual Fed conference in Wyoming. Meanwhile, Treasury prices tumbled, pushing yields sharply higher, as investors no longer needed the safety of government debt.
"The prospects for a return to growth in the near term appear good," Bernanke said. He did warn, however, that lending is not back to normal, and that the difficulty consumers and businesses are having obtaining loans will be a challenge.
A bigger-than-expected jump in home sales also gave stocks a boost and helped send bonds lower. The National Association of Realtors said sales of existing homes rose 7.2% to a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June.
It was the fourth straight monthly increase and the highest level of sales since August 2007. The rise in sales came amid a sharp decline in home prices.
The day's news jumpstarted a listless market that has seen choppy trading this week amid mixed economic news and light summer volume.
The Dow Jones industrial average rose 134.82, or 1.4%, to 9,484.87. The Standard & Poor's 500 index rose 16.18, or 1.6%, to 1,023.55, while the Nasdaq composite index rose 25.91, or 1.3%, to 2,015.13.
The new front month U.S. crude futures contract for October delivery was up $1.29 to $74.20 , after briefly touching $74.48, its highest of the year. London Brent crude for October was up $1.10 at $74.43.
Oil is on track for a 7.3% gain this week, and was last at this level on October 21, 2008 when it closed at $75.22 a barrel on its way down from a record peak above $147.
