Updated February 26, 2013, 5:33 p.m. ET

Dow Rebounds With Triple-Digit Gain


    Stocks staged a rebound rally, led by Home Depot, as Federal Reserve Chairman Ben Bernanke signaled the central bank's stimulus policies would continue.

    Stocks coasted higher after Mr. Bernanke made a strong case for the benefits of the Fed's easy-money policies, meant to stimulate the economy, Above, the floor of the New York Stock Exchange on Tuesday.

    The Dow Jones Industrial Average gained 115.96 points, or 0.8%, to 13900.13. The blue chips reclaimed more than half of Monday's 216-point tumble, which was triggered by Italian election results that ushered in political uncertainty. Tuesday's gains also drove the Dow back into positive territory for February.

    The Standard & Poor's 500-stock index rose 9.09 points, or 0.6%, to 1496.94. The Nasdaq Composite Index gained 13.40 points, or 0.4%, to 3129.65.

    Home Depot jumped 5.7% to lead the Dow. Shares rose after the home-improvement retailer reported better-than-expected quarterly results, announced a stock-buyback program and raised its quarterly dividend.

    Stocks coasted higher after Mr. Bernanke made a strong case for the benefits of the Fed's easy-money policies, meant to stimulate the economy, in testimony before Senate lawmakers. Investors have paid keen attention to when the Fed might eventually wind down stimulus programs, which most investors cite as prime drivers for stock-market gains since 2009.

    "I think investors made a bet, if you will, that he would stick to the script, that he is going to stick to the program until the economy brightens up. He has done just that," said Quincy Krosby, market strategist at Prudential Financial, which manages roughly $1 trillion in assets.
    Last week, the minutes from the most recent Fed policy meeting showed that some officials are uneasy about consequences of these efforts, rattling stocks.
    Materials, consumer-discretionary and energy stocks led gains across all 10 of the S&P 500's sectors. Macy's climbed 2.8% after posting quarterly earnings and issued a profit forecast that topped analysts' expectations.

    The euro fell and European stocks tumbled Tuesday. But most concerning is the return of euro-zone contagion, as the borrowing costs of Italy and other debtors start to rise again, says Dow Jones's Katie Martin.

    Home builders advanced after the S&P Case-Shiller 20-city home-prices index for December rose slightly more than expected. PulteGroup rose 5.7%, D.R. Horton rose 4.1% and Lennar added 3.7%.
    Elsewhere on the economic front, U.S. new-home sales posted the biggest monthly jump in nearly two decades last month, reaching the highest level since mid-2008, according to the Commerce Department.
    U.S. consumer confidence rebounded this month to the highest level since November, according to the Conference Board, a nonprofit research group. And manufacturers in the central Atlantic region report activity turned positive this month, according to the Federal Reserve Bank of Richmond.
    European markets slumped, with the Stoxx Europe 600 falling 1.3%, after Italian elections produced a state of political gridlock and stoked concerns that voter rejection of austerity policies would reignite the region's debt crisis. Italy's FTSE MIB index tumbled 4.9%.
    Asian markets also were broadly lower. Japan's Nikkei Stock Average fell 2.3%, and Hong Kong's Hang Seng Index dropped 1.3% to its lowest level this year.
    Gold staged its largest one-day percentage gain since November, climbing 1.8% to settle $1,615.20 a troy ounce. Crude-oil prices dropped 0.5% to settle at $92.63 a barrel. The dollar rose versus the euro but slipped against the yen. The yield on the 10-year Treasury note edged down to 1.877% as prices rose.
  • In other corporate news, senior-home operator Assisted Living Concepts surged after agreeing to be acquired by private-equity firm TPG for roughly $277 million, following a strategic review of options.
    Cracker Barrel Old Country Store climbed after the restaurant chain's quarterly income jumped to easily top expectations on strong same-store sales growth.
    Tyson Foods slipped after the meat processor warned that the has seen profit-margin pressure in its beef and pork segments.
    Expeditors International of Washington fell after posting fourth-quarter earnings that missed expectations, after revenue in its airfreight-services unit dropped.
    Vitamin Shoppe tumbled after reporting lower-than-expected revenue growth for the latest quarter.
    Titan International declined after the tire maker's core results for the latest quarter missed analysts' estimates.
  • Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com and Chris Dieterich at chris.dieterich@dowjones.com
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