Friday Economic Snapshot: Stocks skyrocket following Bernanke testimony
The stock market reported healthy increases Thursday, following comments U.S. Federal Reserve Chairman Ben Bernanke made in a second day of testimony in front of Congress.
This followed a week that included increased commercial real estate prices and declining housing starts.
Bernanke’s comments that the stimulus would not be phased out until the economy is stabilized brought relief to investors. Major exchanges were pushed to record highs, and the S&P 500 moved toward its 10th positive session out of 11, Reuters reported. The dollar also rose against the euro and other currencies.
The stock surge was also led by positive quarterly results released this week, including those from IBM and Morgan Stanley.
Commercial Real Estate
In May, commercial real estate prices increased, with the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index increasing by 0.7 percent and 2.0 percent, respectively, according to CoStar.
“The value-weighted index, which is heavily influenced by larger transactions and typically tracks with high quality core real estate prices, has now increased by 41 percent from its most recent trough in 2010. For comparison, the equal-weighted index, which is influenced by more numerous smaller-sized transactions, has improved by 10 percent from its bottom in 2011,” CoStar reported.
Though privately owned housing starts in June were down from May, they increased year-over-year.
June starts reached a seasonally adjusted annual rate of 836,000. That’s a 9.9 percent drop from May, but a 10.4 percent increase from June 2012, according to the U.S Census Bureau.
The month-to-month drop was due almost entirely to a decline in the typically volatile multifamily sector. Single-family starts were down only 0.8 percent from May. Approvals of single-family building permits, an indicator of future activity, were up 0.6 percent in June to an annualized rate of 624,000, the best in five years.
Last month, investors were worried the stimulus would end in September, causing hesitation in the markets, according to The New York Times. But now that Bernanke has said the Fed will wait to see substantial progress in the job market before reducing bond purchases, those worried should be quelled.
The increase in commercial real estate shows improvement in market fundamentals and increased investment activity.