Major stock indexes erased a week’s worth of losses Monday, surging after Federal Reserve Chairman Ben Bernanke signaled the central bank is committed to a policy that has helped stocks rally for three years.
The Dow Jones industrial average rose 160.90 points, or 1.2 percent, to 13,241.63, gathering momentum throughout the day to more than recoup its 152-point loss, or 1.2 percent, last week — its worst week of the year.
The S&P 500 index gained 19.40 points, or 1.4 percent, to 1,416.51. The Nasdaq composite index added 54.65 points, or 1.8 percent, to 3,122.57, which is its highest close since mid-November 2000 and an extension of last week’s minor gains.
The S&P 500’s gain also eradicated last week’s loss of 0.5 percent, its worst week of the year.
“We were a little weak last week. People were looking for a correction — maybe they decided that’s as much as we were going to get,” said Jerry Webman, chief economist at OppenheimerFunds Inc.
Ahead of the opening bell, Bernanke said it’s not yet certain the recent pace of improvement in the nation’s labor market will be sustained, noting a still-high unemployment rate and the large number of people who have been out of work for more than six months. Further improvements could be supported by “continued accommodative policies,” he added.
“The fact that he’s maintaining loose policy and is open to further easing is providing a lift for stocks,” according to Andrew Fitzpatrick, director of investments at Hinsdale Associations in Hinsdale, Ill. “Having the Fed providing support and liquidity has been a key driver in this rally,” he said.
Stocks added to broad gains after an index of pending-home sales for February dipped from January, disappointing the expectations of some economists for a 1 percent rise. It was still higher than a year ago.
The Fed’s policy of keeping rates near zero and taking extraordinary measures to boost the economy, such as buying large amounts of bonds, has been credited, in concert with similar actions by other central banks, with lifting U.S. stocks out of a bear market three years ago. The S&P 500 has more than doubled since then.
Crude oil gained 16 cents to $107.03 a barrel. Gold rose $23.20, or 1.4 percent, to $1,685.60 an ounce.