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Stocks are making a big comeback after making some early swings.This morning, we learned that U.S. home prices climbed by 6.8 per cent year-over-year in December. This was higher than the 6.6 per cent gain expected.
“Since most people have their wealth tied up in their home, rising home prices make consumers more confident, more credit worthy and more willing to spend acquired income,” said BTIG’s Dan Greenhaus to MarketWatch.
At 10:00 AM ET, we learned that consumer confidence surged, the Richmond Fed Manufacturing index unexpected turned positive, and new home sales destroyed expectations.
All great news.
Federal Reserve Chairman Ben Bernanke testified before the Senate banking committee. According to his prepared remarks, is looks like he’s maintaining his dovish slant.
Here’s TD Securities Eric Green on Bernanke’s remarks:
Bernanke is staying on message. He mentions that the Fed has the tools for exit and that distortions may arise from QE, but that is merely stating the obvious within a policy that few, including Bernanke, fully understand. We also suspect that it is intended to soothe anxiety among some that see persistent QE has more cost than benefits. Bernanke argues just the opposite. Further easing benefits outweigh the costs, and the tone of his remarks indicate that it remains far too premature to contemplate the end of asset purchases.
It’s worth noting that Bernanke said he didn’t think stocks were overvalued. This was in response to a question.
The Dow Jones Industrial Average fell by 216 points yesterday.