* Relief after Bernanke questioning
* Home builders, retailers gain
* Dow up 2.1 pct, S&P up 2.1 pct, Nasdaq up 2.1 pct
* For up-to-the-minute market news click []
(Updates to close)
By Caroline Valetkevitch
NEW YORK, June 25 (Reuters) - U.S. stocks rallied on
Thursday as investors were relieved that Ben Bernanke
withstood congressional questioning without problems.
Retailers and home builders led stocks higher for much of
the session, helped by a suprising profit increase from
retailer Bed Bath & Beyond Inc <BBBY.O>
Stocks extended gains shortly before midday as investors
took Bernanke's hearing in stride.
The U.S. House of Representatives Oversight and Government
Reform Committee questioned Bernanke on the Fed's role in Bank
of America's takeover of Merrill Lynch, and whether he
pressured BofA's CEO Ken Lewis to go through with the deal
after Lewis raised objections. For details see
[]
"There was concern as to what might happen there. He
seemed to give some pretty decent testimony; at least it
didn't get out of hand," said Bucky Hellwig, senior vice
president at Morgan Asset Management, in Birmingham, Alabama.
The Dow Jones industrial average <> was up 172.54
points, or 2.08 percent, at 8,472.40. The Standard & Poor's
500 Index <.SPX> was up 19.32 points, or 2.14 percent, at
920.26. The Nasdaq Composite Index <> was up 37.20
points, or 2.08 percent, at 1,829.54.
The Dow snapped a four-day losing streak.
Also boosting the market was home builder Lennar Corp
<LEN.N>, which posted a wider quarterly loss, but noted an
increase in new home sales and orders. Its stock shot up 17.5
percent to $9.19. []
The Dow Jones U.S. home construction index <.DJUSHB>
jumped 5.9 percent.
Gains in home builders and retailers point to signs of
strength in consumer spending, which could be a boon for
stocks just as the second-quarter earnings reporting period
gets under way.
Another sign that encouraged investors was news the
Federal Reserve was scaling back an emergency funding program
while extending others.
An auction of $27 billion of 7-year notes attracted strong
demand, pressuring U.S. Treasury bond yields. The auction
completed this week's record $104 billion sale of Treasury
coupons, with all three auctions seeing solid demand.
Higher bond yields mean bigger borrowing costs for
consumers.
In the retail sector, Bed Bath & Beyond reported a
surprising increase in quarterly profit as it cut costs to
offset slumping demand, and its stock gained 9.5 percent to
$31.08. The S&P retail index <.RLX> climbed 3.8 percent.
(Additional reporting by Leah Schnurr; Editing by Jan
Paschal)
