Stocks advance as investors await clues from Fed chair Bernanke about economic rebound

Stocks rise ahead of Bernanke report on economy

NEW YORK — Stocks rose Wednesday ahead of Federal Reserve Chairman Ben Bernanke’s semiannual report to Congress on the state of the economy.

Investors will be listening to the central bank chairman’s remarks for his assessment of the durability of the economic recovery and the interest rate environment.

Stocks had extended their recent decline on Tuesday as investors remained wary about consumer spending trends. A surprising drop in consumer confidence reminded investors of the fragility of the economic recovery.

Bernanke starts his semiannual two-day testimony before Congress about the health the economy. Government leaders want to know what the Fed can or will do to help create jobs and make the economic recovery last.

Investors want to know when interest rate tightening will begin. Bernanke and his Fed colleagues have pledged to hold a key interest rate at a record low near zero for an “extended period.” The idea is for low rates to encourage consumers and businesses to borrow and spend and keep the economy growing.

The Fed surprised investors last week by hiking rates it charges banks for emergency loans. Traders will want Bernanke to continue to provide reassurances that it plans to keep its benchmark rate at historic lows to encourage growth.

The Commerce Department is expected to show that new home sales rose in January, after declining sharply a month earlier. Sales of new homes likely rose 5.3 percent in January to a seasonally adjusted annual rate of 360,000 units, according to economists polled by Thomson Reuters.

The government report is expected at 10 a.m. EST.

A report on home prices Tuesday showed that the housing market is continuing its slow recovery. The Standard & Poor’s/Case-Shiller 20-city home price index rose 0.3 percent from November to December.

Still, many economists are worried that any housing recovery could be headed for tougher times once government support ends.

In the first half-hour of trading, the Dow Jones industrial average rose 62.58, or 0.6 percent, to 10,344.99.

The broader Standard & Poor’s 500 index rose 7.04, or 0.6 percent, to 1,101.64, and the Nasdaq composite index rose 17.83, or 0.8 percent, to 2,231.27.

Augstums reported from Charlotte, N.C.