US stocks up on hopes of Fed action

NEW YORK: Stocks surged on Tuesday, with the S&P 500 and the Nasdaq up more than 2%, as buyers emerged before a highly anticipated address by Federal Reserve chairman Ben Bernanke later this week.Technology and other growth stocks drove much of themarket’s gains, with the S&P Information Technology Index up 2.4%. Aweaker-than-expected reading of the US housing sector was the latest in a stringof discouraging data that has raised expectations the Fed will take measures toprop up the economy. New US single-family home sales fell more than expected inJuly to hit a five-month low.“People are putting money on theFed saying something and buying stocks ahead,” said King Lip, chiefinvestment officer at Baker Avenue Asset Management in SanFrancisco.The Dow Jones industrial average was up 205 points, or1.89%, at 11,059. The Standard & Poor’s 500 Index was up 24 points, or2.09%, at 1,147. Some have speculated Bernanke could unveil measures to revivethe struggling economy, though others say he is most likely to outline gradualactions, which would fall short of a third round of quantitative easing. Shareswith historically high growth rates or expected to show strong growth were amongTuesday’s leaders after getting hit hard in recent weeks, analysts atCredit Suisse said in a note. "Growth stocks that recently have been hurt themost are doing quite well today, which is encouraging, since in a toughcorrection or a bear market, growth stocks with higher valuations typically tendto decline more so than the market," Lip said.