U.S. stocks and exchange traded funds (ETFs) ignited a spark after Chairman of the Federal Reserve Ben Bernanke announced that the economy is on the verge of a recovery, although it isn’t expected to be an easy one.
Bernanke said that the nation is on the road to recovery after witnessing the worst financial crisis and recession since the Great Depression. He warns, however, that difficult challenges lie ahead as consumers and businesses continue to have trouble getting loans and financial sector works out the kinks.
The pace of U.S. existing home sales rose at their fastest pace in almost two years. The National Association of Realtors said that sales jumped 7.2% to an annual rate of 5.24 million units, the highest since August 2007. This improvement was broad-based, with single-family homes rising 6.5% and multi-family dwellings surging 12.5%. The news sent the iShares Dow Jones U.S. Real Estate (IYR) up 3.2% in intraday trading.
The Labor Department reported that 17 states and the District of Columbia reported a drop in unemployment rates. Although this is good news, the nation as a whole is far from being in the clear, as 26 states reported an increase in unemployment numbers. California leads the pack, states Catherine Clifford of CNN Money.
The recovery trend appears to be taking hold across the Pond, as well, as the decline in the eurozone’s PMI has nearly come to a halt. Germany and France, the two largest economies in the eurozone have already witnessed second-quarter GDP growth as manufacturing expanded.
Black gold seems to be moving in tandem with the markets, as it spiked to its highest level this year. Benchmark crude for October delivery went north of $74/barrel as traders saw optimism on a strong rise in China’s bellwether stock index. The United States Oil Fund (USO) was up 1.7% in morning trading.
Barclays announced that it will suspend any further issuances of the iPath Dow Jones-AIG Natural Gas SubIndex Total Return ETN (GAZ). The move, like others in recent days, seems to stem from concerns that the Commodity Futures Trading Commission (CFTC) is getting ready to impose position limits.
Overall, the Dow Jones Industrial Average is up 1.5%, the S&P 500 added 1.7% and the Nasdaq gained 1.4% this morning.
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Kevin Grewal contributed to this article.