NEW YORK (
was the winner among the largest U.S. banks on Tuesday, with shares rising 1.86% to close at $22.44.
The broad indexes ended higher after
Chairman Ben Bernanke defended the central bank's "highly accommodative monetary policy," before the Senate Banking Committee. The short-term federal funds rate has remained in a target range of zero to 0.25% since late 2008 and the Fed has been purchasing $85 billion a month in long-term securities, with no offsetting securities sales.
The latest federal spending deadline comes Friday, with "sequestration" requiring spending cuts totaling $1.2 trillion over a 10-year period, including an $85 billion spending reduction for the current fiscal year. Bernanke said that "Congress and the Administration should consider replacing the sharp, frontloaded spending cuts required by the sequestration with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run."
"Such an approach could lessen the near-term fiscal headwinds facing the recovery while more effectively addressing the longer-term imbalances in the federal budget."
In economic news, the Census Bureau on Tuesday reported that sales of new homes in the United States increased to a seasonally adjusted annual pace of 437,000 in January from an upwardly revised 378,000 during December. Economists expected new-home sales to rise to an annual pace of 383,000, according to Zacks.
The Case-Shiller 20-city index for December showed home prices rising of 6.8% year-over-year, up from a downwardly revised increase of 5.4% the previous month. "The 10- and 20-City Composites, which bottomed out in March 2012 continued to show both year-over-year and monthly gains in December," according to David M. Blitzer, the chairman of the index committee at S&P Dow Jones Indices. Blitzer also said that "these movements, combined with other housing data, suggest that while housing is on the upswing some of the strongest numbers may have already been seen."
KBW Bank Index
rose 0.49% to close at $53.28.
The Federal Deposit Insurance Corp. said that the nation's banks earned $34.7 billion during the fourth quarter, increasing 37% from $25.3 billion during the fourth quarter of 2011. For all of 2012, U.S. banking industry earnings totaled $141.3 billion, increasing from $118.4 billion in 2011.