Global stocks, oil gain on likely Bernanke confirmation

By Herbert Lash

NEW YORK (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) rose on Monday on expectations Ben Bernanke will be confirmed for a second term as chairman of the Federal Reserve, helping lift oil prices and the U.S. dollar, and the gloom over by dour U.S. home sales.

The dollar rose against the yen as Bernanke edged closer to winning a vote later this week in the Senate, which helped ease anxiety among investors.

The dollar earlier pared gains versus the yen after data showed existing U.S. home sales fell at the fastest rate on record in December, a bearish sign for the key housing market and the global economic recovery.

Existing U.S. home sales fell 16.7 percent in December after a gain of 7.4 percent in November. Analysts had expected home sales to fall 10 percent.

The likelihood that Bernanke will be confirmed, however, boosted the appeal of riskier assets and helped U.S. Treasury prices to fall as U.S. stocks (Read more about the stock market today. ) recovered from their worst three-day slide in 10 months last week.

“A bit of the uncertainty has abated with Bernanke on track to be confirmed and we are seeing stocks come up on that,” said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut.

U.S. President Barack Obama and congressional leaders rallied support for Bernanke and defended his record as a crisis-fighter in an effort to rally votes.

The major U.S. equity indexes in the morning cut their gains on news of the U.S. home sales data, with the Nasdaq dipping into negative territory before recovering.

“The Fed chairman you know is better than the one you don’t, and the market really hates uncertainty,” said Karl Mills, president of Jurika, Mills & Keifer Investment Partners in Oakland, California.

“If there is a perception that the direction of the Fed is going to be increasingly politicized and this is going to become an issue that is beaten around Congress, that will be very bad for the markets in the near term.”

The Dow Jones industrial average (.DJI: ) closed up 23.88 points, or 0.23 percent, at 10,196.86. The Standard & Poor’s 500 Index (.SPX: ) was up 5.02 points, or 0.46 percent, at 1,096.78. The Nasdaq Composite Index (.IXIC: ) was up 5.51 points, or 0.25 percent, at 2,210.80.

Oil prices rose above $75 a barrel on a weaker dollar, higher U.S. stocks (Read more about the stock market today. ) and an oil spill in Texas that limited crude deliveries to some U.S. refiners.

Oil prices earlier fell to a one-month low of nearly $74 a barrel, erasing almost $10 a barrel over the past two weeks after hitting a 15-month peak of $83.95 on January 11.

U.S. crude for March delivery settled at $75.26 a barrel, up 72 cents, or nearly 1 percent.

London ICE Brent settled at $73.69, up 86 cents.

The benchmark 10-year U.S. Treasury note was down 7/32 in price to yield 3.63 percent.

U.S. Treasury debt prices dipped, as Wall Street recovered from the Dow’s worst three-day slide in 10 months, reducing the safe-haven appeal of bonds.

The dollar was down against a basket of major currencies, with the U.S. Dollar Index (.DXY: ) down 0.11 percent at 78.191.

The euro was up 0.09 percent at $1.415, and against the yen, the dollar was up 0.38 percent at 90.23.

Adding to pressure on the yen was speculation the Bank of Japan may announce new measures to loosen monetary policy, including buying government bonds to support the economy.

The softer U.S. dollar and investors looking for a bargain helped buoy metal prices, traders said.

U.S. gold futures ended higher on a combination of a dollar drop, crude oil gains and renewed physical buying after last week’s sharp losses.

Gold for February delivery settled up $6 at $1,095.70 an ounce in New York.

Asian stocks fell, with the Nikkei (.N225: ) ended down 0.74 percent at a four-week closing low and the MSCI index for Asia ex-Japan shares was down 0.7 percent.


(Reporting by Ryan Vlastelica, Wanfeng Zhou, Richard Leong in New York; Brian Gorman in London; writing by Herbert Lash; Editing by Andrew Hay and Diane Craft)

Global stocks, oil gain on likely Bernanke confirmation