After suffering from the biggest fall in benchmark indexes experienced since November, the U.S. stocks have advanced after better than expected data poured in from the consumer confidence and housing sector.
In the least of homebuilders, PulteGroup Inc. and KB Home gained more than 5.7%. Home Depot Inc. also saw a growth of 5.7% after it increased its dividend and planned to go ahead with its share buyback of $17 billion when the profits were found to leave the estimates from analysts shying away.
The S&P’s 500 Index gained .6% and closed at almost 1,497 in New York. yesterday, it had fallen by almost 1.8%. on the other hand, the Dow Jones grew by almost 116 points to cross 13,900. The number of shares changing hands grew by over 14% over the 3-month average.
According to Charles Schwab Corp. Director-Market and Sector Analysis, the economic figures are doing well. The company has client assets worth over $2 trillion. He says that the home data demonstrates that he housing sector is making a rebound and is expected to make its contribution to growth. It is also helpful in feeding the consumer confidence because it is related. At a time when there is increase in uncertainty, the recent economic figures are helping to soothe out things by a small margin.
Purchase of new homes increased in January to beat all records since the middle of 2008. This helped equities to rise dramatically. This is an indication that the industry is going to contribute to the economic growth. In around 20 cities in the country, home prices saw a growth in 2012 until December that was not experienced in the past 6 years. In addition, the confidence of U.S. consumers rose more than estimated in the current month.
The Chairman of Federal Reserve, Ben S. Bernanke protected the unexpected asset purchases made by the bank. According to him, the central bank is seeking to expand without much risk of inflation or bubbles in asset-price. In his report to the Senate Banking Committee, he said that the automatic fed budget cuts that would start from March would create a huge burden on the U.S. economy if the legislators are unable to prevent the reductions.
The Chairman also recommended to put the budget on a retainable long-term path. The members of the Federal Open Market Committee are discussing whether they should restrict $85 billion through monthly bond purchase. There is an increasing concern that because the central bank has a record balance sheet of over $3 trillion, investors can get inspired to engage in excess risk-taking which may obscure the need for the Fed to move towards easing out. according to the last meeting, it was said that the central bank must be ready to change its momentum of purchases based upon the economic outlook.