Federal Reserve Chairman Ben Bernanke reassured lawmakers interest rates will remain low, driving stocks higher on Wednesday as investors welcomed the promise of more cheap money.
Banks, which have benefited from borrowing rates at historic lows, led the market higher. Bank of America
Investors overlooked a 47-year-low in the pace of new home sales and the generally somber tone taken by Bernanke on the economy.
Although we're not going to have robust growth, it is going to generate low interest rates for a long time and a lot of liquidity, said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California.
Semiconductor shares recovered most of the previous session's losses, with Micron Technology Inc
JPMorgan Chase & Co
Despite Wednesday's gains, the major indexes are still negative for the week after Tuesday's decline, the largest in nearly three weeks for the market.
The Dow Jones industrial average <.DJI> gained 91.75 points, or 0.89 percent, to 10,374.16. The Standard & Poor's 500 Index <.SPX> rose 10.64 points, or 0.97 percent, to 1,105.24. The Nasdaq Composite Index <.IXIC> advanced 22.46 points, or 1.01 percent, to 2,235.90.
On the Nasdaq, Autodesk Inc
Home builders' stocks tumbled after government data showed sales of newly built single-family homes fell to a record low.
D.R. Horton Inc
H&R Block Inc
Elsewhere, securities regulators adopted a new rule that restricts short selling in stocks that have fallen more than 10 percent on any given day, more than a year after the financial crisis provoked cries to rein in investors who bet on a stock's decline.
It is unclear what the long-term effect is going to be, said Bernie McSherry, senior vice president of strategic initiatives at Cuttone & Co in New York. It seems like a fairly watered-down version of the initial proposal.
About 7.63 billion shares were traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 11 to 4, while on the Nasdaq, more than five stocks rose for every three that fell.
(Additional reporting by Leah Schnurr; Editing by Jan Paschal)