Stocks Rally on Housing Data

Indexes reached their best levels of the year on Friday. Next week's watch list includes data on new home sales, durable goods orders, and personal income

U.S. stocks closed higher for a fourth straight session Friday, reaching their highest levels of the year. Wall Street's rally continued as investors embraced a 7.2% spike in July existing home sales and encouraging comments about the economy from Federal Reserve Chairman Ben Bernanke.. In a speech at the Kansas City Fed's annual conference in Jackson Hole, Wyo., Bernanke acknowledged the global economy is more stable, and said "the prospects for a return to growth in the near term appear good."

Friday's market gains also came as August options expired, notes S&P MarketScope. An extended rebound for the Shanghai composite index also boosted stock-market sentiment.

On Friday, the 30-stock Dow Jones industrial average finished higher by 155.91 points, or 1.67%, at 9,505.96. The broad Standard & Poor's 500-stock index was up 18.76 points, or 1.86%, to 1,026.13. The tech-heavy Nasdaq composite index added 31.68 points, or 1.59%, to 2,020.90.

Treasuries were off sharply on the existing home sales news.

The dollar index was off, and the euro up after a rise in a key measure of Eurozone manufacturing sentiment. The yen was off on a report China intended to raise bank capital requirements.

Gold and crude oil futures were higher.

After Friday's upside surprise in existing home sales, the onus is now on upcoming data to suggest the recovery is sustainable, says Action Economics. "There isn't a lot on next week's calendar, however, to provide the tangible evidence needed," says Action Economics. The focus will be on Wednesday's releases of new home sales and durable goods orders for July. Median estimates point to a 3% rebound in durable orders, and a modest rise in new home sales to a 0.390 million unit annual pace.

Next Friday's July reports on personal income and personal consumption expenditure data will also be important, according to Action Economics, with small gains expected for each.

Dow Jones has been talking to potential buyers about the sale of its stock-market indexing business, which includes the Dow Jones industrial average, The Wall Street Journal reported on Friday.

The Journal, in its online edition, reported that the process is being run by Goldman Sachs, and could result in a sale, joint venture or some other type of arrangement. The report cited people familiar with the matter.

In company news Friday, KKR-owned discount retailer Dollar General has filed to raise up to $750 million in an initial public offering.

Shares of customer management software company Salesforce.com (CRM) surged Friday after the company posted better than expected second-quarter earnings.

Shares of food giant J.M. Smucker (SJM) rallied after beating expectations.

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