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The Dow Jones roars 176 points, massive day for stocks

Last updated: 09:39 28 Feb 2013 AEDT, First published: 08:39 28 Feb 2013 AEDT

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U.S. stocks rallied overnight driven by positive housing data which lifted sentiment, while Federal Reserve chief Ben Bernanke wrapped up his second day of testimony on Capitol Hill.

By the close of trade the Dow Jones had rallied 176 points (+1.27%) to 14,076, while the NASDAQ gained 33 points (+1.04%) to 3162.

Bernanke appeared today before the House Financial Services Committee, for the second day of the Fed's semiannual report to Congress on the economy, and said the central bank has the tools it needs to reduce stimulus and avoid a spike in inflation.
 
He said the Fed should be careful not to raise interest rates too early, but did recognize that the central bank would eventually have to begin thinking up a new strategy.
 

Ben Bernanke

Stocks gained on Tuesday after Bernanke, in his first day of testimony, defended the  the monetary easing policy and said the benefits outweigh any risks, with the program to continue until clear signs of an economic recovery are visible, easing any fears that the policy would end sooner than projected.
 
He also warned, however, that the automatic federal budget cuts slated to start March 1 would burden the U.S. economy significantly if Democrats and Republicans cannot come to a compromise.
 
Equities gains were widespread on Wednesday after the National Association of Realtors released its pending home sales for January, which rose 4.5%, compared to a revised 2% decline in December. Economists were expecting a 3% rise in January.
 
Earlier this week, Commerce Department figures also showed new-home sales rose 15.6% last month to an annual rate of 437,000, well above estimates for 381,000 and the highest level since July 2008.
 
Meanwhile, this morning, durable goods orders data for January fell a bigger than expected 5.2% due to declines in bookings for commercial and defense aircraft. Excluding the volatile transportation sector, however, orders rose 1.9% for the fifth straight month - much higher than expected.


Corporate news
 
In corporate news, the retail sector was in focus Wednesday as several heavy hitters report quarterly results.
 
Target Corp. (NYSE:TGT) shares fell more than 1% after the discount retailer said its fourth quarter profit fell 2% to $961 million, though per share profit rose to $1.47 a share from $1.45 a share a year earlier after shares outstanding dropped 2.8%. Excluding items, the company earned $1.65 a share, compared to estimates for $1.47 a share. Sales rose 6.8% to $22.37 billion.
 
The retailer, which saw a disappointing holiday season for some of its departments, forecast an adjusted profit for the year of $4.85 to $5.05 a share, while analysts expected $4.87 a share.
 
Dollar Tree (NASDAQ:DLTR) shares rose over 11% after it said Wednesday that fourth-quarter profit rose to top market views, with sales of $2.25 billion also beating estimates of $2.22 billion.
 
T.J. Maxx parent TJX Cos. (NYSE:TJX) shares gained more than 2% after it said it plans to increase its share buyback and raise its dividend, but its outlook fell short of consensus estimates.
 
After the bell Wednesday, retailers Limited Brands (NYSE:LTD) and J.C. Penney (NYSE:JCP) are due to report, with the latter expected to report a loss of 22 cents a share in the fourth quarter, according to a consensus survey by FactSet.
 
Groupon (NASDAQ:GRPN) is projected to post fourth-quarter earnings of 3 cents a share.
 
Late Tuesday, Priceline.com (NASDAQ:PCLN) reported adjusted earnings above analyst expectations, with shares rising over 3% Wednesday.
 
First Solar (NASDAQ:FSLR), meanwhile, saw shares tumble more than 13% Wednesday, a day after the company estimated disappointing first quarter sales.
 
Shares of Apple (NASDAQ:APPL) also edged down as the company wrapped up its annual shareholder's meeting on Wednesday, with barely any mention of the $137 billion in cash it is hoarding on its balance sheet. The consumer tech company's board, which has received pressure from investors regarding the pile of cash, is having "very active discussions" on the matter, according to reports from the meeting, but no specific detail was given.
 

Commodities
 
Oil futures gained slightly on Wednesday, after finishing at their lowest level of the year in the previous session.  The Energy Information Administration reported this morning a rise in imports offset a rise in refineries runs to feed a 1.1 million barrel build in oil inventories in the February 22 week to 377.5 million barrels.
 
April crude added 13 cents, or 0.1%, to settle at $92.76 a barrel on the New York Mercantile Exchange.
 
Meanwhile, gold futures declined to settle below $1,600 an ounce, after recording their biggest one day advance in the previous session. Investors shied away from the safe haven yellow metal, preferring riskier equities after the encouraging housing data.
 
Gold for delivery in April fell $19.80, or 1.2%, to end at $1,595.70 an ounce on the Comex division of the New York Mercantile Exchange.
 

Europe
 
As fears over Italy subsided following an adequate Italian bond auction and a surprise jump in European economic confidence, European markets finished broadly higher today with shares in France leading the region. The CAC 40 gained 1.83% while Germany's DAX rose 1.04% and the U.K.'s FTSE 100 advanced 0.88%.

 

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