Comments from Federal Reserve chairman Ben Bernanke pushed the markets higher yesterday, as investors grew hopeful that the central bank would support the economy further. A few economic reports, which came in somewhat weak, could hardly impact the Benchmarks’ rally.

The Dow Jones Industrial Average (DJI) gained 1.2% and closed the day at 13,241.63. The Standard & Poor 500 (S&P 500) was up 1.4% and finished yesterday’s trading session at 1,416.51. The tech-laden Nasdaq Composite Index once again outperformed fellow benchmarks as, jumping 1.8% to finish at 3,122.57. The fear-gauge CBOE Volatility Index (VIX) dropped 3.8% to settle at 14.26. Advancers outshined the decliners on the New York Stock Exchange, as for 74% of the gainers, 23% stocks traded lower. The remaining 3% stocks were left unchanged. Total volume on the NYSE was 3.58 billion shares.

Ben Bernanke single-handedly drove investor sentiment higher yesterday, though he struck a cautious note about the labor market. He called the drop in unemployment as "somewhat out of sync" with economic growth and noted that the recent trend of an improving labor market could be linked to the fact that companies were adjusting their employee structure after the recession. In his speech at the National Association for Business Economics, Bernanke said: "To the extent that this reversal has been complete, further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies”.

While he suggested economic growth is required for the unemployment rate to decline appreciably, investors sensed better support from the central bank to the economy and were hopeful about the easy money policy. Bernanke commented: "Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies".

For a long time now, investors have been waiting for the third round of the bond-buyback plan. However, the Fed has never lived up to their expectations and Fed minutes on the past occasions suggested the central bank was divided over the third round of quantitative easing (QE3). Previous bond purchase plans had boosted the markets significantly, reflected markets’ proclivity for the liquid money. This time, Bernanke did not mention anything about QE3, but the “accommodative policies” that he spoke about left investors’ hopeful about an easy money policy going forward.

On the economic front, the National Association of Realtors reported that pending home sales dropped in February, According to the report, Pending Home Sales Index dropped 0.5% from 97.0 in January to 96.5 in February. Lawrence Yun, NAR chief economist, said: “The spring home buying season looks bright because of an elevated level of contract offers so far this year…If activity is sustained near present levels, existing-home sales will see their best performance in five years. Based on all of the factors in the current market, that’s what we’re expecting with sales rising 7 to 10 percent in 2012”.

Coming to sectoral stocks, the Technology SPDR Select Sector Fund (XLK) gained 1.5% and stocks including, Apple Inc. (NASDAQ:AAPL), International Business Machines Corp. (NYSE:IBM), Oracle Corporation (NASDAQ:ORCL), Microsoft Corporation (NASDAQ:MSFT) and Red Hat, Inc. (NYSE:RHT) increased 1.8%, 1.1%, 2.1%, 1.8% and 2.4%, respectively.