The day the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI) has been waiting for is finally here. With Fed Reserve Chairman Ben Bernanke speaking before Congress this morning, investors are finally getting some news on the economy that can inform their trades — and so far, the news has been good. The index is up 103 points as of 11:30 a.m. EDT, down from an initial spike of a 151-point gain.
Bernanke’s testimony
Within the past few days, there have been a number of comments from top Federal Reserve officials that preempted the chairman’s testimony this morning. But they all said the same thing: It’s too early in the economic recovery to pull back on the current stimulus policy. Bernanke noted that the recent improvements in the labor market are a positive sign, but that there is still weakness that requires the support of the current policy. Acknowledging the low-interest-rate environment, Bernanke said that the Fed is looking for high interest rates later on, but while cutting back the current stimulus would cause a small rise in rates, it would also carry the risk of slowing or ending the current recovery.
During his testimony, Bernanke also put some of the onus on Congress, saying that “monetary policy does not have the capacity to fully offset an economic headwind of this magnitude.” With the steps taken by Congress, such as new tax increases, the sequestration, and other fiscal policy changes at the federal level, Bernanke expects a substantial drag on the economy through the rest of the year. Reiterating his statements from the most recent Federal Open Market Committee announcement, Bernanke said that the Fed would adjust the current QE policy as new data comes out showing economic improvements — especially in the labor market.
In housing news
Applications for new mortgages and refinancings fell for the second week in a row. Increasing mortgage interest rates are being blamed for the 9.8% fall. With the majority of activity falling under the refinance category, the 11.7% drop in new refinancing applications made a big impact. New mortgage activity for new homes fell by 3%.
Existing home sales were up in the month of April, however. Though the 0.6% increase doesn’t seem like much, it does show that there is still demand for homes. This is an important piece of data for the housing market, which has seen new housing starts decline significantly.
Inside the Dow
The Home Depot, Inc. (NYSE:HD) is leading the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI) component stocks this morning with a 2.68% gain as of this writing. Though some of the stock’s gains may be fueled by the recent damage caused by a horrific tornado in Oklahoma, the retailer also has benefited from the housing sector’s continued rebound. The company recently announced earnings that beat expectations on both the top and bottom lines. With that, The Home Depot, Inc. (NYSE:HD) increased its outlook for the rest of the year. As the housing market continues to recover, the likelihood of the company following its lead is high.
The article JPMorgan and Friends Join Dow on Its Climb originally appeared on Fool.com is written by Jessica Alling.
Fool contributor Jessica Alling has no position in any stocks mentioned — you can contact her here. The Motley Fool recommends Home Depot. The Motley Fool owns shares of JPMorgan Chase (NYSE:JPM).
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