NEW YORK — Federal Reserve Chairman Ben Bernanke gave the stock market the tonic it wanted: Interest rates will stay low.
Stocks rallied Wednesday and ended a two-day slide after Bernanke sounded an upbeat note about the economy during his semiannual report to Congress. He told the House Financial Services Committee he still expects rates will remain low for an extended period. Investors want to see low-cost borrowing continue to help revive the economy.
Financial stocks helped pull the Dow Jones industrial average up 92 points after the index slid 101 on Tuesday. Meanwhile, the technology-dominated Nasdaq composite index rose after software company Autodesk Inc. reported stronger earnings and revenue than expected.
At the same time, a disappointing report on new home sales brought the latest reminder that a recovery in the economy will be difficult even with government aid.
The Commerce Department said sales of new homes fell to a record low in January. Economists expected an increase. The government said that new home sales fell 11.2 percent last month to a seasonally adjusted annual sales rate of 309,000 units. That's the lowest level on a record that goes back nearly 50 years. It was the third straight monthly drop.
Housing has been a big concern for investors who this week have been worrying about consumer spending. A surprising drop in consumer confidence reminded investors of the fragility of the economic recovery and sent stocks sliding on Tuesday. The market also posted modest losses on Monday.
For more than a year, investors have been looking to answer the question of how soon the economy will be in a sustained recovery. Bernanke's testimony brought calm to the market but another batch of worrisome economic numbers would likely send investors running again. That has been their pattern for months.
Jim McDonald, chief investment strategist at Northern Trust in Chicago, said Bernanke's testimony signaled that interest rates will remain low for the next six months. He said that should allow the economy to proceed with a gradual recovery.
"Even though nothing he said was particularly new, it was just enough to calm the ruffled feathers that were out there," McDonald said.
According to preliminary calculations, the Dow rose 91.75, or 0.9 percent, to 10,374.16. The broader Standard & Poor's 500 index rose 10.64 or 1 percent, to 1,105.24, and the Nasdaq composite index rose 22.46, or 1 percent, to 2,235.90.