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Thursday, August 25, 2011

US Stocks: Winning 3 for 3 (ext.)

NEW YORK (CNNMoney) -- Stocks kept the positive momentum going Wednesday, finishing higher for a third straight session as investors cheered a rise in durable goods orders.

The Dow Jones industrial average (INDU) rallied 144 points, or 1.3%, while the S&P 500 (SPX) rose 15 points, or 1.3%.

The gains this week come after stocks took a brutal beating last week. But investors are awaiting Federal Reserve Chairman Ben Bernanke's key speech later this week for further hints about the health of the economy.

While markets are hoping for Bernanke to say QE3 is on the way at this year's event, most economists don't believe the Fed chief will signal any changes in monetary policy.

When the Fed pledged to keep rates low until mid-2013 earlier this month, three district bank presidents voted against the measure.

"I think investors want to hear the Fed announce QE3, and it's baked into the market, but I don't think that's what we'll get," said Schrader. "We may see some initial selling from the disappointment, but Bernanke would also make a big statement by sitting back: He would be saying that the economy is not as bad as everyone thinks."

Orders for durable goods rose 4% in July, after slipping 1.3% the previous month, according to a report from the Commerce Department. Economists were looking for just a 1.9% rise in orders.

Durable goods, or items designed to last two years or longer, are typically purchased by consumers and corporations when they feel confident about the economy.

The report suggests "that business investment growth may actually accelerate in the third quarter," said Paul Dales, senior U.S. economist at Capital Economics, in a note to clients.

But a housing market report was less upbeat. While U.S. home prices climbed a seasonally adjusted 0.9% in June, they are down 4.3% on an annual basis, according to the Federal Housing Finance Agency index.

The dollar gained ground against the euro, the Japanese yen and the British pound.

Oil for October delivery slipped 28 cents to $85.16 a barrel.

Gold futures for December delivery fell $104, or 5.6% to settle $1,757.30 an ounce.

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