U.S. stocks rallied on Wednesday, with the S&P 500 and Nasdaq halting a three-day losing run, after an upbeat report on new-home sales and as investors bet on further monetary stimulus from the European Central Bank.
"The home-sales number was encouraging, and perversely enough Europe was fairly strong. The interpretation is bad news is going to accelerate" further monetary easing moves by the European Central Bank, said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
"We've got central banks that are acting as they should and a housing market that is in transition, but improving; the market is going to start to reflect that," said Art Hogan, chief market strategist at Wunderlich Securities.
Bed Bath & Beyond jumped after the retailer reported quarterly results that beat expectations; Accenture fell after the technology consultancy projected quarterly revenue that missed estimates, and Merrimack Pharmaceuticals rallied after the company said it would develop its drug to treat pancreatic cancer outside the U.S. with Baxter International. Apple fell after the company pulled its iOS 8.0.1 update after multiple users reported serious issues with the new version of the operating system.
The Commerce Department reported new-home sales rose 18 percent to 504,000 units in August after a 1.9 percent gain in July. Existing-home sales declined in August for the first time in four months.
"Housing is going to show a great deal of volatility as cash buyers transition to credit buyers, and by that I mean the folks that were paying cash as an investment in a depressed market are being replaced by natural home buyers that are now using credit," said Art Hogan, chief market strategist at Wunderlich Securities.
Ahead of the open, stock futures gained on hopes for more monetary stimulus from the ECB and after a measure of German business sentiment fell for a fifth straight month in September.
Equities furthered their ascent after Chicago Federal Reserve President Charles Evans said the central bank should be