Stocks and commodities started the week on a positive note, thanks to comments from Federal Reserve Chairman Ben Bernanke as well as improved prospects for bailouts in the euro area. Bloomberg reports:
The Standard & Poor’s 500 Index rallied 1.4 percent to close at 1,416.51 at 4 p.m. New York time, returning to its highest level in almost four years. The Stoxx Europe 600 Index added 0.9 percent. Treasury 10-year yields climbed two basis point to 2.25 percent after increasing as much as six points earlier. Oil increased 16 cents to $107.03 a barrel. The Dollar Index, a gauge of the U.S. currency against six major peers, fell for a second day while gold and silver rallied.
Bernanke said that while he’s encouraged by the unemployment rate’s drop to 8.3 percent, further improvement in the job market will require continuing the central bank’s stimulative monetary policies. Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. European finance ministers will meet on March 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall.
Investors appeared to have focused on the positives and seemed relatively undaunted by more evidence that the US housing recovery lost steam in February. The National Association of Realtors reported on Monday that pending home sales fell 0.5 percent in February.
But weaker US data on Monday were not just limited to housing. The Chicago Fed's National Activity Index fell to minus 0.09 in February from 0.33 in January. The Dallas Fed's general business activity index fell to 10.8 in March from 17.8 in February.
The euro area, though, provided some positive economic data. In Germany, the Ifo business climate index rose to an eight-month high of 109.8 in March from 109.7 in February. Italy's consumer confidence index also rose to an eight-month high of 96.8 in March from 94.4 in February.