Bulls Put Faith in Bernanke

"You might actually get to where expectations for a reassuring Fed offer support for the market into Wednesday," says Marc Pado, chief market analyst at Cantor Fitzgerald, noting that Bernanke is very much a believer in the power of expectations. "He believes expectations for inflation cause inflation, and expectations for the economy send the economy in one direction or another," Pado says.

Indeed, expectations for a Fed-rally could be behind traders shrugging off economic headwinds Monday when the Dow ended the day down only 12 points, or 0.1%, to 12,469.07 after dropping 100 points earlier in the trading session. The S&P 500 gained 0.1% to close at 1437.50, and the Nasdaq Composite finished the session up 0.3% to close at 2455.63.

The points of weakness were tied to the concerns of the day. The Dow Jones Transportation Average fell 1.3% on the day as traders digested oil's 1.06% increase.

Index components, such as airline companies Continental Airlines(CAL Quote) and AMR(AMR Quote), and trucking companies Con-Way(CNW Quote) and YRC Worldwide(YRCW Quote), slipped as much as 3.1%.

"The new-home sales data and the oil prices set off a familiar daisy chain of concerns early on," says Art Hogan, chief market analyst at Jefferies & Co.

Analysts had expected a 5.4% increase in new-home sales, but they fell 3.9% in February atop January's 15.8% plunge. February's decline marks the lowest level of new homes sold since 2000, according to Peter Kretzmer, senior economist at Bank of America. Home prices also slid 0.3% year over year, and the supply of new homes increased to an 8.1 month supply, from 7.3 months in January.