Stocks jumped Friday, setting the stage for a four-session winning streak, after a sharp jump in existing-home sales and some encouraging economic data out of Europe.
Existing-home sales surged 7.2 percent to a 5.24 million annual pace, the highest jump since August 2007. Economists had expected a rise of just 2.2 percent. Home sales were up 5 percent year over year. It was the fourth straight month sales have risen.
The Dow was up about 60 points before the report, then shot up to more than 100 points afterward.
The other big news of the morning was a speech by Federal Reserve Chairman Ben Bernanke. The Fed chief said the economy is on the mend but recovery is likely to be sluggish and risks still remain.
"After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good," Bernanke said in remarks prepared for delivery to an annual Fed conference in Jackson Hole, Wyoming.
Still, trading volumes have been low, typical of late summer, which could bring some volatility.
Asian stocks closed mostly lower, but China's Shanghai Composite Index managed to build on Thursday’s gains with a 1.7 percent rise.
AIG shares rose more than 5 percent after the troubled insurer won dismissal of a $1 billion workers' compensation lawsuit.
Morgan Stanley rose folllowing news the brokerage is planning a hiring spree for up to 400 traders and salespeople as the investment bank looks to pull out of its string of quarterly losses.
Bank of America and Citigroup both rose, with Citi up nearly 3 percent.
Gap shares rose after FBR raised its rating on the stock to "outperform" and both FBR and Jefferies raised their price targets on the stock. This came after Gap reported earnings late Thursday.
Starbucks made a move that sums up the economy right now: It's lowering the prices on some of its basic drinks like small coffees and lattes but raising the price on some of its larger, more complex drinks.
Eric Claus, CEO of the supermarket chain A&P , said the stock market has gotten ahead of the consumer.
In earnings, retailer Ann Taylor reported earnings of 6 cents a share that were better than Wall Street expectations.
And Aeropostale rose after the teen chain reported a rise in same-store sales.
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