Wall Street Bounces
Wall Street posted strong gains Wednesday after Federal Reserve Chairman Ben Bernanke told Congress low interest rates are needed to continue to support the economy.The Dow Jones industrial average jumped 90.01 points, or 0.88%, to 10,372.42 at the end of trading. The S&P 500 index climbed 10.59 points, or 0.97%, to 1,105.19. The Nasdaq composite gained 22.46 points, or 1.01%, to end the day at 2,235.90.
The Fed chairman told the House Financial Services Committee he still expects interest rates will remain low for an “extended period.” That’s good news for investors who want to see low-cost borrowing continue to help revive the economy. Bernanke also noted on his first day on Capitol Hill that the recession continues to abate, but not when it comes to the job market, which “has been hit especially hard,” he said.
“The job market remains quite weak, with the unemployment rate near 10 percent and job openings scarce,” Bernanke said.
Meanwhile, the Senate has approved a $15 billion job-creation bill that would give businesses tax breaks for hiring the unemployed and states more money for infrastructure projects.
The four-prong bill would:
- Exempt employers from Social Security payroll taxes on new hires who were unemployed;
- Fund highway and transit programs through 2010;
- Extend a tax break for business that spend money on capital investments, such as equipment purchases;
- Expand the use of the Build America Bonds program.
The legislation was approved by a 70-28 vote, with some 13 Republicans, including newly elected Republican Sen. Scott Brown, voting for the measure Wednesday. It now moves to the House, which passed a more comprehensive $154 billion bill in December. The House could take up the legislation as soon as Friday.
New Home Sales Hit Record Low
Sales of newly built single-family homes fell to a record low in January. The Commerce Department said sales dropped 11.2%to a 309,000 unit annual rate. That’s the lowest level since records started in January 1963. It was the third straight month that new home sales fell.
The Mortgage Bankers Association’s index of mortgage applications, which includes both purchase and refinance loans, fell 8.5% in the week ended February 19. An $8,000 tax credit program for new home buyers and $6,500 credit for qualified repeat home buyers ends next month.
Luxury retailer Saks Inc. (NYSE: SKS) offered a cautious sales outlook Wednesday amid fourth quarter losses. Saks announced that it lost $4.61 billion, or 3 cents per share, in the quarter that ended January 30.
The loss marked an improvement over their fourth quarter last year, when the company lost $99.74 billion, or 72 cents per share. Shares of Saks Inc. were trading down two cents, or 0.28%, an hour after the opening bell.
The Washington Post (NYSE: WPO) reported strong fourth quarter profits. Its cable TV and education divisions provided most of the lift. The publishing segment also made money after large cost cuts.
The company, which owns Newsweek magazine, Kaplan education services and TV properties along with The Washington Post newspaper, earned $81.7 million, or $8.71 per share. That was up from $18.8 million, or $2.01 per share, a year earlier.
Shares of The Washington Post were trading 5.49 points higher, or 1.33%, at 418 points.
Luxury home builder Toll Brothers Inc. (NYSE: TOL) said the slow recovery of the housing market helped them post a narrower loss in its fiscal first quarter. Toll Brothers lost $40.8 million, or 25 cents a share, in the three months ended in January. That compares with a loss of $88.9 million, or 55 cents a share, in the prior-year period.
Toll Brothers were trading half-a-point lower, or 2.65%, at 18.41 per share.
Commodities & The Dollar
Oil bounced back above $80 a barrel Wednesday with oil climbing 1.18 points to 80.04 for April delivery. Small gains were also made for heating oil, natural gas, and unleaded gas. The national average for one gallon of unleaded gas also rose to $2.67.
Gold fell 6.40, or 0.58%, to 1.096.80 per ounce.
The dollar fell against most major world currencies, including the euro and yen. The dollar now trades at 1.3536 against the euro.