Feb. 26 - Bernanke warns of spending cut impact; Home prices rise; Home Depot 34% dividend hike; Saks and Macys beat holiday profit estimates; Wall Street bonuses on the rise. Bobbi Rebell reports.
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Wall Street rebounded from Monday's severe losses- posting solid gains after Federal Reserve Chairman Ben Bernanke defended the FOMC's bond buying stimulus in his semi- annual testimony to congress- and expressed optimism about the financial markets.
SOUNDBITE: BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE (ENGLISH) SAYING:
"I don't see much evidence of an equity bubble. Earnings are very high as I said the equity risk premium is above normal. That is in other words pricing is- equity holders are still being somewhat risk averse in their behavior. "
Bernanke's testimony eased concerns about a stalemate in Italy's general election- and its possible threat to financial stability in Europe.
In other economic news:
US single family home prices jumped in December- up 6.8 percent year over year, according to the S&P/Case Shiller survey of 20 metropolitan areas. It was the best showing since 2006.
S&P's David Blitzer:
SOUNDBITE: DAVID BLITZER, MANAGING DIRECTOR AND CHAIRMAN OF THE INDEX COMMITTEE, S&P DOW JONES INDICES (ENGLISH) SAYING:
"This has really become one of the hot leading spots in the economic recovery. Big contribution to GDP in the 3rd and 4th quarters of last year. If we look across the numbers for the full year 2012 for home prices- very strong."
But Home Depot is cautious- and says they do not believe the housing market will fully recover this year.
The comments were made when the largest home improvement chain reported better than expected earnings- thanks to Hurricane Sandy. Home depot also raised its quarterly dividend by 34 percent sending the stock higher.
Macy's and Saks both beat holiday profit forecasts and said sales were expected to rise this year. Investments in new technology are paying off- bringing in more e-commerce sales. For example, online sales at Macy's, which also owns Bloomingdales, soared almost 48 percent.
And Wall Street cash bonuses rose last year- to a pool of $20 billion dollars- but that is still below pre-crisis levels. According to New York Comptroller Thomas DiNapoli, the average cash bonus was up 9 percent compared to 2011- to almost $121,900.
Taking a look at the closing numbers:
In the US: stocks climbed higher after their worst decline since November on Monday.
But in Europe: shares sank to three month lows after the Italian election stalemate brought back concerns about the future of the Eurozone.
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