Stocks Jump as Bernanke Says Economy Near Recovery (ext: ABCNews/TheStreet)

The best monthly increase in existing-home sales since 1999 helped fuel broad-based stock market advances Friday, with the Dow reaching a new closing high for the year.

The Dow Jones Industrial Average, which climbed 155.91 points, or 1.7%, to 9505.96 Friday, may go by another name in the future as reports late Friday said Dow Jones could put its index business up for sale.


The S&P 500 tacked on 18.76 points, or 1.9%, to 1026.13, and the Nasdaq Composite edged up 31.68 points, or 1.6%, to 2020.90.

The stock market's gains were broad, reaching across all industries, but the biggest jumps came from energy, industrial and material stocks as oil and commodities prices soared. Bank stocks also rose sharply.


Just nine days after the Fed declared the economy to be "leveling out" rather than contracting, Bernanke went further, saying, "the prospects for a return to growth in the near term appear good." Speaking at an annual Fed conference in Wyoming, Bernanke did warn that lending is not back to normal, and that the difficulty consumers and businesses are having obtaining loans will be a challenge. But his tone was the most optimistic it has been since the start of the financial crisis.

A bigger-than-expected jump in home sales also gave stocks a boost and helped send bonds lower. The National Association of Realtors said sales of existing homes rose 7.2 percent to a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June.


Still, while Bernanke's positive assessment on the economy was encouraging, the market's challenges, including rising unemployment and sluggish consumer spending, are certainly far from over. The market appears to be on an upward trajectory, but analysts cautioned that stocks will likely bounce around through at least the rest of the summer.


While Bernanke's comments were clearly reassuring for the stock market, investors could quickly lose their optimism if one of their greatest concerns, consumer spending, shows more signs of weakness. The Fed's upbeat comments last week set off a rally that quickly stalled after a weak reading on consumer sentiment.


Next week, investors will get two key reports on consumer confidence that, if worse than expected, could easily upset the market's gains.

"We're not past the volatile stages of the market," said Lowell Pratt, president of The Burney Co., an equity management firm.