Thread: Dow rallies 175 points to a new 5-year high

Dow rallies to new 5-year high

By Ben Rooney @CNNMoneyInvest February 27, 2013: 4:19 PM ET
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NEW YORK (CNNMoney)
A rally on Wall Street gained momentum late Wednesday as investors welcomed more upbeat housing data and a second day of dovish testimony from the chairman of the Federal Reserve.

The Dow Jones industrial average rallied 175 points, or 1.2%, to end at its highest level since October 2007. The S&P 500 jumped 1.3% and the Nasdaq gained 1%.


Traders said the rally was a continuation of Tuesday's advance, which came after Fed chairman Ben Bernanke signaled to lawmakers that the central bank's easy money policies would remain in force. Bernanke reiterated his argument Wednesday that the Fed's bond-buying program, known as QE, has helped the economy.

"There's nothing specific to cite," said Dan Greenhaus, market strategist at BTIG in New York. "But if you had to pin it to something, it would be Bernanke saying QE will continue in an environment of improving economic data."

Stocks have been pulling back lately, after a strong start to the year. All three indexes are still up between 6% to 7% so far this year.

Investors also cheered further signs of strength in the housing market.

A realtors group said Wednesday that pending home sales rose in January to the highest level since April 2010. The pending home sales data came one day after reports on home prices and sales came in better than expected.

Homebuilder stocks rallied Wednesday, with shares of Hovnanian (HOV) jumping 5%, leading rivals Toll Brothers (TOL), DR Horton (DHI) and Lennar (LEN).

The housing data overshadowed a mixed report on new orders for long-lasting goods.

The U.S. Census Bureau said durable goods orders dropped $11.8 billion, or 5.2%, in January. This was a steeper decline that the decrease of 3.5% projected by economists. However, excluding transportation, new orders would have increased 1.9%.

- Dow rallies to new 5-year high - Feb. 27, 2013

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